5 Steps of Enterprise Risk Mitigation

5 Steps of Enterprise Risk Mitigation

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Enterprise risk management framework is a structure that offers different strategies for identifying risk and how to manage the risks identified. In as playing Pokémon requires you to assess not only your strengths and weaknesses to support them during battle, risk management strategies concentrate on a firm’s advantages and flaws so that it can determine how to design support controls that protect its database of information.

Defining Liability Mitigation and Five Ways to Deal With Risk

What is risk mitigation?

Mitigating risk involves appraising strategic, compliance, functional, economic and reputational risks and putting oversight in place to keep those risks from affecting your business negatively. In a deck building game such Pokémon TCG, a player assesses the various threats to his or her characters in order to design a proper gaming strategy. Mitigating risk is similar to playing a Pokémon game.

Several frameworks help a firm organize their enterprise risk mitigation strategy within their data context. OCTAVE (Operationally Critical Threat, Asset, and Vulnerability Evaluation) was developed at Carnegie Mellon University by the CERT Coordination Center. OCTAVE provides a self-directed procedure customizable to the size of an organization. The FAIR (Factor Analysis of Information Risk) is another framework that strives to confront security practice weaknesses by providing a custom risk mitigation vocabulary. The NIST RMF (National Institute of Standards and Technology’s Risk Management Framework) with congressional oversight involves authenticated research processes and offers game plans for choosing prior controls and evaluation methods. The COSO CSF (Committee of Sponsoring Organizations of the Treadway Commission Cybersecurity Framework) aids formulation of industry-respected controls and recommends data for reinforcing decisions.

The various options for risk mitigation are the different types of decks you can build. Once a player a strategy on which to build their deck, they need to establish diverse ways to safeguard their pocket monsters.

Step 1: Determine Business Objectives

The very first step an organization needs to do is determine their business goal before they can begin the risk assessment process. Organizations must make sure that departmental objectives align so that a risk review aligns with overall corporate goals. In the same way, playing a deck building game requires a player to discern the diverse strategies in order to win the game.

Risk mitigation strategies are necessary for every business as they increase profit margins through strengthening business performance. Unforeseen circumstances especially cyber risks reduce operational efficiency that leads to loss of customers and increased costs to remedy the situation. Risk management should not be viewed as an expense but a necessary cost that is advantageous in the end and adds value to your business. We are in the era of data breach awareness and preparing for security risks, not only increases customers’ loyalty by knowing their information is protected and secured.

A company, therefore, needs to review its potential and current risks facing the business as well as threats to their revenue stream. A firm, therefore, needs to establish its organizational objectives before determining the risks it faces as it adds value to the mitigation process. Mitigation is all about knowing the different options available to win a game in order to make the right choice.

Step 2: Review the Risks

This stage involves assessing the vulnerabilities that an organization has. Assessing risks begins with reviewing company assets. In a corporate risk analysis, assessing your economical, tangible, employee/supplier and company assets helps you determine which aspects you need to protect and how to protect them.

After assessing your assets, you need to examine how your competitors can abuse those assets. Different assets have different liabilities that can easily influence revenue and reputation. In order to design an appropriate risk management strategy, you need to identify ways in which competitors (or malevolent adversaries) can use your best defenses to their advantage.

Step 3: Determine Risk Acceptance or Risk Avoidance

This stage involves accepting the risk or avoiding it. By reviewing the IT landscape, you must look at the controls in place and accept or avoid risks based on the risk assessment conducted on your organizational assets. For instance, many companies perceive Amazon Web Services (AWS) as one of the most secure cloud service providers. However, malicious hackers have targeted AWS leading to DDoS attacks causing data breaches. Although a firm recognizes the vulnerabilities associated with AWS, it can determine that the protections it offers outweigh the weaknesses associated with it. In this case, management is accepting risk rather than avoiding it. 

Step 4: Map Internal and External Risks

Risk mitigation strategies are formulated after an organization has determined its risk tolerance level. When mapping internal and external threats, organizations engage in a similar thought process. Internally, a particular department may have staff issues or lacks proper management. For instance, when the human resource department lacks to report an employee termination on time, the IT department lags in removing these employees access to the company’s information placing it at risk. 

Externally, two different risks arise. Your business partners, for instance, may lack proper security risking enterprise data through access points and malicious hackers can exploit these vulnerabilities in your system.

By mapping internal and external risks, an organization can get beneficial perception on the interconnectedness of nature and types of risks.

Step 5: Set Controls and KPIs

Playing building games requires supervision and customization. When structuring a playable deck, players select the cards they think will give them an upper hand against their opponents. They may learn that the hand they choose to play may have the vulnerability. In the next round, they restructure their hand in order to maximize their outcome. They also formulate their strategies effectiveness by using variables such as time played before a win or the number of points ahead.

Project management needs proper strategies in the development of products. In project management, communication is essential to projects in the various departments to ensure continued feasibility. Risk mitigation requires ongoing communication between different departments. In addition, continuous control, monitoring-and-testing perform the same function in the risk and compliance areas.

Author Bio

Ken Lynch is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. Ken founded Reciprocity to pursue just that. He has propelled Reciprocity’s success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. Ken earned his BS in Computer Science and Electrical Engineering from MIT. Learn more at ReciprocityLabs.com.

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