What is risk management?
With risk management, we define the process of identifying and assessing risks and the creation of a plan that allows us to contain or control those identified and their consequences that can affect a company. A risk is a potential loss or damage and is attributable to different areas: legal liability, natural disasters, accidents, management errors, or cyber threats.
Approaches to address these risks and understand their potential consequences are risk management strategies and must be included in a management plan, which is a documented process that illustrates how the team or organization identifies or deal with risks.
Risk management at the enterprise level is an important component of the entire organizational strategy as it allows you to avoid those situations that could prevent the company from achieving its goals.
In many sectors, adherence to compliance regulations on business risk management is essential, and numerous organizations have defined standards for their management An example, the National Institute of Standards and Technology and the International Organization for Standardization (ISO).
Financial services is an industry required to comply with numerous compliance requirements and regulations. It is also a high-risk environment, moving between customer data protection, investment decisions and credit risk definition.
Regardless of the industry in which they operate, ISO 31000 principles can be used as a risk management framework for any business. These standards facilitate the systematic implementation of risk management plans.
IT risk management
In IT, the risk arises from the potential loss or damage caused by threats that exploit vulnerabilities in hardware or software. Common Vulnerabilities and Exposures (CVEs) are publicly disclosed lists of security flaws that help IT professionals coordinate efforts to prioritize and resolve vulnerabilities to make information systems more secure.
The way we develop, deploy, integrate and manage IT has changed dramatically. IT security must become an integral part of the infrastructure and product life cycle from the start, and be included in the risk management strategy in a way that the company can be proactive and reactive.
Risk containment can go through tools such as predictive analysis and automation, which allow you to monitor the infrastructure.
Operations teams can use predictive analytics to proactively identify and resolve problems before they impact the entire environment. This type of analysis also serves to prevent security problems and avoid unscheduled downtime by detecting abnormal activity on a network and identifying potential vulnerabilities.
Automation ensures fast and efficient feedback without slowing down the product life cycle and can also solve identified issues.
Risk management procedures
No organization can completely avoid all risks, but the consequences need not necessarily be negative. The company must evaluate the potential risk against the opportunity it may represent, and determine what the acceptable level of risk is. This information can support decision making.
Risk management involves assigning a high priority to those risks that have a high probability of occurring, and that would apply more incisive repercussions and the application of mitigation procedures aimed at addressing these risks.
Risk management phases
- Risk identification: identification and description of potential risks. Identifiable types of risk include, among others, financial risks, operational risks (which can affect, for example, the supply chain), project risks, business risks and market risks. Once identified, they must be noted or otherwise documented in appropriate registers.
- Risk analysis: definition of the likelihood of a risk occurring by analyzing the factors and documenting the potential consequences.
- Risk assessment: use of internal controls and risk analysis to determine the extent. At this stage, it is also necessary to decide what level of risk is acceptable to the company and which ones need to be addressed immediately.
- Risk mitigation: After establishing the priority and importance of risks, a risk response strategy must be developed to control or minimize it.
- Risk Monitoring: Risks must be monitored continuously, to ensure that mitigation plans are working or to be aware of the increased threat.
Risk management strategies
The main risk management strategies include prevention, reduction, sharing and retention.
- Risk prevention: consists of stopping and avoiding any activity that may involve in a risk.
- Risk reduction: Focuses on actions that can reduce both the likelihood of a risk occurring and its impact.
- Risk sharing: when an organization transfers or shares part of the risk with another organization. An example of this is the outsourcing of manufacturing or customer service activities to third parties.
- Risk-retention: when risks have been assessed, and the organization decides to accept its potential occurrence. No mitigation action is taken, but an emergency plan can be prepared.
Why Choose Risk Management software?
Risk Management software tests consolidate and support open-source software to make it immediately available to the enterprise. Risk Management software is dedicated to helping you stay competitive, flexible, and agile, without compromising security and regulatory compliance.
Risk Management software can help your teams and risk managers set up risk remediation and prevention tactics in their respective environments. SoftwareⓇ Insights offers predictive analytics tools that can perform a comprehensive assessment and intelligent forecasting across physical, virtual, public and private cloud and container-based environments.
As part of your risk management strategy, your organization can proactively identify risks and automate remediation with software infrastructure Automation Platform and Insights playbooks.