What Is Integrated Risk Management and How Does It Work with Third-Party Risk Management?
Integrated Risk Management (IRM) is a set of processes and practices that relies on risk-aware culture and risk-conscious technologies. It includes a number of important principles for improving security within an organization.
IRM combines elements of corporate governance, cyber risk management and compliance into a singular, comprehensive approach. It’s designed to be streamlined and efficient, introducing automation, cross-departmental solutions and new best practices to guarantee the collaboration of the entire organization.
The Benefits of IRM
IRM has many elements in common with existing strategies relevant to your organization, such as governance and compliance. So what are the benefits of an IRM approach? And how does IRM work with third-party risk management?
- Bringing multiple teams together. IRM strives to bring multiple teams together. In a large organization, it’s only natural for departmental silos to develop. Individuals in different teams tend to have different priorities, different values and sometimes even a completely different culture. Even more so when including third-party vendors. When IRM becomes a centrally focused priority, all teams work together to understand and implement it,ensuring that risk management unfolds in all areas.
- Saving time with automation. While automation isn’t necessarily a part of every IRM approach, one hallmark of IRM is saving time and improving efficiency—and automation is a great way to achieve this. With the right automated tools, you can quickly screen for potential vulnerabilities, identify threats based on triggers and possibly take immediate action in response to issues. Whatever your approach is, you’ll be working actively to save costs and reduce wasted time. This is especially useful if you work with hundreds or thousands of vendors.
- Designating risk management as a priority. You can’t have an integrated risk management strategy unless risk management is a top priority. With IRM in place, you can start building your decisions and business structures around risk management—rather than treating risk management as an afterthought. This enables better decision making, fewer threats, and ultimately, your business will save money.
- Top-down awareness of risk management. Generally, organizations plan their IRM strategies from the top down. CEOs and other top-level decision makers spearhead the change in culture and infrastructure. Top-down cultural change tends to be easier to manage and last longer. Also, when high-level executives take risk management seriously, they usually make better decisions for the organization overall.
Attributes of IRM
According to Gartner, integrated risk management (IRM) includes six specific, unique attributes:
1. Strategy. IRM requires you to create and implement an overall framework which helps you execute effective ground-level tactics. You need to set goals, establish priorities and design a system that allows you to achieve them.
2. Assessment. With assessment, you must identify, evaluate and prioritize different risks facing your organization, as well as your third-party vendors. This is a proactive element in your strategy, requiring you to anticipate and research potential threats.
3. Response. When you identify a risk or face an imminent threat, you need a plan in place to respond to it. How can you mobilize your team to mitigate risk or eliminate an existing threat?
4. Communication/reporting. How are you communicating the impact of your IRM strategy with stakeholders and leaders within your organization, as well as your third-party vendors who support you?
5. Monitoring. With monitoring, you establish systems that allow you to observe and review governance objectives, risks and risk mitigation and controls. To properly manage IRM, you need to monitor your organization as well as your third parties.
6. Technology. Design and implement technologies to help you solidify your IRM architecture.
All six pillars must be addressed to be effective.
How to Implement an IRM Program
How are you going to address these pillars and implement an IRM program in your organization? Follow these important steps:
- Tie cybersecurity and risk management to business outcomes. You may need to convince directors, decision makers and other stakeholders that IRM is worth pursuing and will ultimately be beneficial for the organization. Showing how cybersecurity and risk management are tied to measurable business results is the best way to achieve this. For example, the average cost of a data breach in the United States is $3.86 million; what would be the cost necessary to prevent this? What other benefits will your organization see by implementing an IRM strategy?
- Develop a risk-aware culture. A key feature of IRM is creating and nurturing a “risk-aware” and “risk-engaged” culture. In other words, every individual within your organization needs to take risk management seriously, and collectively, you should be working together to reduce risk and improve security. Cultural changes can be hard to implement, especially in large organizations, so you’ll need the coordination of multiple leaders to begin this process.
- Consider risk in all strategic decisions. Strategic decisions, whether they’re coming straight from the top of the organization or are being handled by middle managers, should always be made with risk management in mind. Better risk handling and more intelligent risk calculations can lead to better business outcomes at all levels.
- Evaluate your approach and improve upon it. It’s rare for IRM strategies to be implemented perfectly from the beginning. Instead, it’s vital to evaluate your approach’s effectiveness and keep issuing updates to make it better. How much are you spending on your IRM strategy? What kinds of business outcomes are you seeing as a result? Are there better ways you can develop a risk-aware culture? What are the biggest inconsistencies or inefficiencies with your strategy?
IRM strategies require a gradual, phased approach for the best results. Because this system is so comprehensive, it has the power to completely transform your organization—but it also requires meticulous planning and extensive investment.
Do you need help bringing IRM to your organization or streamlining your third-party security workflow? Panorays quickly and easily automates third-party security risk evaluation and management, handling the whole process from inherent to residual risk, remediation and ongoing monitoring.
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