We face risk every day – it’s a part of life. For organizations, it’s also a part of doing business. There are many different definitions of risk and even more methods for managing it. Over the last couple decades, risk management has evolved due to the changing business landscape and interconnected world.
As the digital universe has expanded, so have the capabilities of the individuals and organizations trying to exploit it. Sadly, organizations face these threats every single day. This is why they must find a way to identify and deal with these risks without jeopardizing business operations and reputation. All while operating in an increasingly regulated world.
Exposure to Business Risk Has Always Been a Concern
The type and frequency of risk has changed but exposure to business risk has always been a concern. Early on, organizations simply had to identify the risk and define how they would deal with it. This wasn’t an exact science and the total ramifications were seldom understood. As regulations increased in an effort to protect consumers, risk management evolved from simple identification and remediation to compliance and governance.
A Shift from GRC to IRM
Gartner describes the key to the success of IRM as the ability to provide a vertically integrated view of risk starting with an organization’s strategy through its business operations and ultimately into the enabling technology assets. Easier said than done. But they also estimate that by 2021, more than 50% of large enterprises will use an IRM solution set, up from approximately 30% just a year ago (Top 10 Factors for Integrated Risk Management Success, Gartner Inc., August 2018). If you’re looking to make the transition from GRC or even ERM to IRM, you need to understand the elements of IRM and the long-term benefits.
The first step toward IRM is to understand the key components as defined by Gartner. These six use cases include:
Digital Risk Management (DRM)
Vendor Risk Management (VRM)
Business Continuity Management (BCM)
Audit Management (AM)
Enterprise Legal Management (ELM)
Enterprise legal management software applications provide support through better documentation, spend management, information availability, and collaboration via an integrated set of applications that include matter management, e-billing, financial/spend management, legal document management, and business process management.
- Strategy-based; aligns with corporate mission and objectives for improved, comprehensive, decision-making
- Consolidated reporting from across the organization
- Removal of “silos” provides enterprise-wide awareness of risk
- Integrated view of risk provides full understanding, resulting in business opportunity, cost savings, competitive advantage, and business value
Is IRM right for your organization? Only you can decide. But one thing is certain—each organization needs to continue to evolve in how it approaches risk. More and more CEOs expect their risk management strategy to align with organizational goals and objectives. In the end, IRM ties your program and activities to something meaningful for the business.
If you would like to learn more about Integrated Risk Management, check out this IT Leadership Summit presentation entitled: Integrated Risk Management = Enterprise-Level, Strategic Decision Making.