The ultimate guide to integrated risk management

Integrated risk management provides organizations with a comprehensive approach to tackling diverse types of risks through coordinated processes, practices, and technologies. In this guide, we will explore the components of integrated risk management, its significance, and how you can implement an integrated risk management strategy to establish a culture of risk awareness, security, and compliance across your organization.

What is integrated risk management?

Integrated Risk Management (IRM) is a process that encompasses the entire organization and creates a unified framework for managing and mitigating risks. A term first coined by Garner in 2017, IRM considers the interconnected nature of risks across various departments and functions, unlike traditional risk management which often focuses on specific areas such as finance or operations in isolation.

IRM involves a set of processes and technologies that enables organizations to strategically and proactively identify, evaluate, respond to, monitor, and report on risks. This discipline ensures that risks are managed consistently across the organization, enhancing resilience and agility.

Why is integrated risk management important?

Developing an integrated risk management strategy allows organizations to improve their overall risk governance and exercise better control over various business activities, from day-to-day operations to larger-scale strategic initiatives such as regulatory compliance and supply chain management. Here are some of the benefits of IRM:

• Enhanced risk oversight: IRM promotes a comprehensive view of organizational risks through detailed risk assessments, streamlining communication between leadership and IT teams which facilitates data-driven decision-making
• Finding opportunities and efficiencies: Risk analysis and evaluation are key components of IRM, enabling organizations to identify both opportunities or positive impacts of risks and efficiencies in current processes and procedures
• Effective risk mitigation: Adopting an integrated risk management strategy demonstrates how well an organization can mitigate, treat, and manage its unique risks which fosters trust among customers, partners, and stakeholders
• Operational resilience: With an integrated approach to risk management, organizations can safeguard their data, assets, and systems against potential threats and be well-prepared for any disasters and disruptions, ensuring business continuity
• Cost savings: By mitigating individual risks through corresponding security controls, organizations can reduce or eliminate costs associated with cyberattacks, operational or reputational damage, and legal or regulatory non-compliance

The 6 components of integrated risk management

An integrated risk management program consists of six key elements:

Strategy

The first component of IRM is a risk management strategy that aligns with your organizational context and business objectives. This entails developing a risk management framework by analyzing your organization’s structure, industry, operations, and compliance requirements, identifying risks that are relevant to your organization, and creating a risk profile to determine your organization’s ability and willingness to take on these risks.

Assessment

The next component of IRM is risk assessment. In order to identify the different cyber risks, operational risks, market risks, and other types of risks faced by your organization and evaluate their likelihood and impact, a thorough risk assessment must be conducted. Identified risks must then be prioritized based on their overall risk rating. The results of risk assessments must be documented, communicated, and regularly reviewed to ensure that they remain applicable to the organization.

Response

Based on risk identification, assessment, and prioritization, creating a response program is the next step to eliminate, resolve, or reduce the impact of risks. This involves formulating risk treatment plans, designing risk mitigation controls, establishing dedicated risk management teams, and assigning remediation actions to ensure clear ownership and accountability.

Communication and reporting

A critical component of IRM is maintaining transparency in risk management activities and cultivating a risk-aware culture. This requires establishing communication channels and reporting mechanisms to keep employees, vendors, partners, and other key stakeholders aligned with the organization’s risk management strategy and informed about the progress of response initiatives.

Monitoring

Continuously monitoring risks, treatment plans, controls, risk management procedures, and business processes is essential to verify the effectiveness of the organization’s risk management strategy. This could include producing regular reports on risk assessments and mitigation measures, utilizing automated monitoring systems, and conducting periodic audits and assessments to gain insight into the organization’s risk posture.

Technology

Finally, implementing technology solutions that support your risk management strategy and mitigation activities is the last component to complete and augment your IRM efforts. Software such as 6clicks offer risk management, control management, compliance automation, and other capabilities, all in one platform to help your organization streamline the deployment and operation of your IRM program.

Steps for building an IRM program

Based on the components above, you can now proceed to build your IRM program.  Executing an IRM strategy requires careful planning and collaboration among leaders and members of the organization. Fundamental steps include:

1. Setting objectives: Lay down risk management objectives to define the outcomes that your organization would like to achieve with the IRM program. These objectives must cover cybersecurity, disaster preparedness, and other aspects of risk management while maintaining alignment with your business strategy. Support from leadership teams must also be established.
2. Building a risk assessment framework: Set up procedures and workflows for identifying, classifying, evaluating, prioritizing, addressing, and reporting on the status of risks and delegate roles and responsibilities to appropriate team members. It also involves using tools such as a risk register to store, organize, and manage risks, a risk taxonomy for categorizing risks, and risk matrices to illustrate the likelihood and impact of risks.
3. Identifying assets and resources: Information about your organization’s assets such as data, infrastructure, and systems, as well as resources such as vendors, stakeholders, and employees, must be recorded, compiled, and organized. Assets and resources must also be mapped to the business processes depending on them to gain a clear understanding of how their associated risks can impact the organization.
4. Implementing risk mitigation measures: Develop security policies, enforce compliance and risk mitigation controls, and create risk treatment plans to remediate or minimize risks. Risk awareness must be incorporated into the organization’s security culture through training and education, the same way risk information must be integrated into strategic decisions for effective risk management.
5. Monitoring risk management activities: To ensure risk management processes and mitigation measures are working as intended, ongoing monitoring is necessary. Adopt technologies such as continuous control monitoring to automate the testing and validation of controls. Routinely report the status of risks and treatment plans to executives and perform internal audits and security assessments on a regular basis to uncover non-conformities and inefficiencies, allowing you to execute corrective actions or make improvements as necessary.