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Humans are constantly considering risk, even when we don’t realize it. Risk management is our response to the possibility of suffering harm or something going wrong…and things go wrong all the time! Car accidents, stolen wallets, unexpected bad weather, burnt dinners. The list could go on and on. We are programmed to manage risk. So how does risk management translate into a business?
We believe that the success and operability of your organization depends on how well you manage your unique risks. Risk management is critical to your organization. Risk management is the process of identifying, assessing, mitigating, and controlling threats to an organization. These threats could stem from financial uncertainty, legal liabilities, management, accidents, or natural disasters. Because of the growing information security-related threats, companies’ risk management programs are under intense scrutiny from industry and governing bodies. Protecting digital assets like protected health information, cardholder data, personally identifiable information, intellectual property, or financial statements is a top priority.
Risk management programs consist of performing risk analyses, conducting risk assessments, documenting policies and procedures, building an internal audit program, and creating an actionable risk management plan. All of these elements create a strategy for mitigating your organization’s unique risk.
A risk analysis identifies the most likely threats to your organization and analyzes the vulnerabilities of the organization to those threats. This is a very factual process that includes asset characterization, threat identification, vulnerability identification, control analysis, likelihood determination, impact analysis, risk determination, control remediation, and results documentation. At the end of a risk analysis, you want to have a list of what critical assets you’re trying to protect, the risks your organization is facing, and what your organization is doing to limit vulnerabilities.
A risk assessment is a systematic process for evaluating existing controls and assesses their adequacy against the potential operational, reputational, and compliance threats identified in a risk analysis. A risk assessment should include: conducting a risk assessment survey, identifying risks, assessing the importance and likelihood of risk, creating a risk management plan, and then implementing that plan.
Your risk management plan means nothing if it isn’t documented in your policies and procedures. We strongly believe that if something’s not written down, it’s not happening. These policies and procedures should define how you mitigate identified risks, and then effectively communicated to all employees.
According to the Institute of Internal Auditors, “the role of internal audit is to provide independent assurance that an organization’s risk management, governance, and internal control processes are operating effectively.” An internal audit is conducted objectively and designed to improve and mature an organization’s business practices. An internal audit program provides objective insight into an organization’s culture, policies, procedures, improves efficiency of operations, evaluates risk and protects assets, assesses controls, and ensures relevant regulatory compliance.
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KirkpatrickPrice is a licensed CPA firm, PCI QSA, and a HITRUST CSF Assessor, registered with the PCAOB, providing assurance services to over 600 clients in more than 48 states, Canada, Asia, and Europe. The firm has over 12 years of experience in information security and compliance assurance by performing assessments, audits, and tests that strengthen information security and internal controls. KirkpatrickPrice most commonly provides advice on SOC 1, SOC 2, HIPAA, HITRUST CSF, PCI DSS, ISO 27001, FISMA, and CFPB frameworks.
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