Risk IT

Risk IT provides an end-to-end, comprehensive view of all risks related to the use of IT and a similarly thorough treatment of risk management, from the tone and culture at the top, to operational issues.

Risk IT was published in 2009 by ISACA.[1] It is the result of a work group composed by industry experts and some academics of different nations, coming from organizations such as IBM, PricewaterhouseCoopers, Risk Management Insight, Swiss Life, and KPMG.

Contents

Definition

IT risk is a part of business risk—specifically, the business risk associated with the use, ownership, operation, involvement, influence and adoption of IT within an enterprise. It consists of IT-related events that could potentially impact the business. It can occur with both uncertain frequency and magnitude, and it creates challenges in meeting strategic goals and objectives.[1]

Management of business risk is an essential component of the responsible administration of any organization. Due to IT’s importance to the overall business, IT risk should be treated like other key business risks.

The Risk IT framework[1] explains IT risk and enables users to:

IT risk is to be managed by all the key business leaders inside the organization: it is not just a technical issue of IT department.

IT risk can be categorised in different ways:

IT Benefit/Value enabler
risks related to missed opportunity to increase business value by IT enabled or improved processes
IT Programme/Project delivery
risks related to the management of IT related projects intended to enable or improve business: i.e. the risk of over budget or late delivery (or not delivery at all) of these projects
IT Operation and Service Delivery
risks associated to the day by day operations and service delivery of IT that can bring issues, inefficiency to the business operations of an organization

The Risk IT framework is based on the principles of enterprise risk management standards/frameworks such as COSO ERM and ISO 31000.

In this way IT risk could be understood by upper management.

Risk IT principles

Risk IT is built around the following principles:[1]

IT risk communication components

Major IT risk communication flows are:

An effective information should be:

Risk IT domains and processes

The three domains of the Risk IT framework are listed below with the contained processes (three by domain); each process contains a number of activities:

  1. Risk Governance: Ensure that IT risk management practices are embedded in the enterprise, enabling it to secure optimal risk-adjusted return. It is based on the following processes:[1]
    1. RG1 Establish and Maintain a Common Risk View
      1. RG1.1 Perform enterprise IT risk assessment
      2. RG1.2 Propose IT risk tolerance thresholds
      3. RG1.3 Approve IT risk tolerance
      4. RG1.4 Align IT risk policy
      5. RG1.5 Promote IT risk aware culture
      6. RG1.6 Encourage effective communication of IT risk
    2. RG2 Integrate With ERM
      1. RG2.1 Establish and maintain accountability fro IT risk management
      2. RG2.2 Coordinate IT risk strategy and business risk strategy
      3. RG2.3 Adapt IT risk practices to enterprise risk practices
      4. RG2.4 Provide adequate resources for IT risk management
      5. RG2.5 Provide independent assurance over IT risk management
    3. RG3 Make Risk-aware Business Decisions
      1. RG3.1 Gain management buy in for the IT risk analysis approach
      2. RG3.2 Approve IT risk analysis
      3. RG3.3 Embed IT risk consideration in strategic business decision making
      4. RG3.4 Accept IT risk
      5. RG3.5 Prioritise IT risk response activities
  2. Risk Evaluation: Ensure that IT-related risks and opportunities are identified, analysed and presented in business terms. It is based on the following processes:
    1. RE1 Collect Data
      1. RE1.1 Establish and maintain a model for data collection
      2. RE1.2 Collect data on the operating environment
      3. RE1.3 Collect data on risk events
      4. RE1.4 Identify risk factors
    2. RE2 Analyse Risk
      1. RE2.1 Define IT risk analysis scope
      2. RE2.2 Estimate IT risk
      3. RE2.3 Identify risk response options
      4. RE2.4 Perform a peer review of IT risk analysis
    3. RE3 Maintain Risk Profile
      1. RE3.1 Map IT resources to business processes
      2. RE3.2 Determines business criticality of IT resources
      3. RE3.3 Understand IT capabilities
      4. RE3.4 Update risk scenario components
      5. RE3.5 Maintain the IT risk register and iT risk map
      6. RE3.6 Develop IT risk indicators
  3. Risk Response: Ensure that IT-related risk issues, opportunities and events are addressed in a cost-effective manner and in line with business priorities. It is based on the following processes:
    1. RR1 Articulate Risk
      1. RR1.1 Communicate IT risk analysis results
      2. RR1.2 Report IT risk management activities and state of compliance
      3. RR1.3 Interpret independent IT assessment findings
      4. RR1.4 Identify IT related opportunities
    2. RR2 Manage Risk
      1. RR2.1 Inventory controls
      2. RR2.2 Monitor operational alignment with risk tolerance thresholds
      3. RR2.3 Respond to discovered risk exposure and opportunity
      4. RR2.4 Implement controls
      5. RR2.5 Report IT risk action plan progress
    3. RR3 React to Events
      1. RR3.1 Maintain incident response plans
      2. RR3.2 Monitor IT risk
      3. RR3.3 Initiate incident response
      4. RR3.4 Communicate lessons learned from risk events

Each process is detailed by:

For each domain a Maturity Model is depicted.

Risk evaluation

The link between IT risk scenarios and ultimate business impact needs to be established to understand the effect of adverse events. Risk IT does not prescribe a single method. Different methods are available. Among them there are:

Risk scenarios

Risk scenarios is the hearth of risk evaluation process. Scenarios can be derived in two different and complementary ways:

Each risk scenarios is analysed determining frequency and impact, based on the risk factors.

Risk response

The purpose of defining a risk response is to bring risk in line with the overall defined risk appetite of the organization after risk analysis: i.e. the residual risk should be within the risk tolerance limits.

The risk can be managed according four main strategy (or a combination of them):

Key risk indicators are metrics capable of showing that the organizaztion is subject or has a high probability of being subject to a risk that exceeds the defined risk appetite.

Practitioner Guide

The second important document about Risk IT is the Practitioner Guide.[3] It is made up of eight sections:

  1. Defining a Risk Universe and Scoping Risk Management
  2. Risk Appetite and Risk Tolerance
  3. Risk Awareness, Communication and Reporting
  4. Expressing and Describing Risk
  5. Risk Scenarios
  6. Risk Response and Prioritisation
  7. A Risk Analysis Workflow
  8. Mitigation of IT Risk Using COBIT and Val IT

Relationship with other ISACA frameworks

Risk IT Framework complements ISACA’s COBIT, which provides a comprehensive framework for the control and governance of business-driven information-technology-based (IT-based) solutions and services. While COBIT sets good practices for the means of risk management by providing a set of controls to mitigate IT risk, Risk IT sets good practices for the ends by providing a framework for enterprises to identify, govern and manage IT risk.

Val IT allows business managers to get business value from IT investments, by providing a governance framework. VAL IT can be used to evaluate the actions determined by the Risk management process.

Relationship with other frameworks

Risk IT accept Factor Analysis of Information Risk terminology and evaluation process.

ISO 27005

For a comparison of Risk IT processes and those foreseen by ISO/IEC 27005 standard, see IT_risk_management#Risk_management_methodology and IT_risk_management#ISO_27005_framework

ISO 31000

The Risk IT Practitioner Guide[3] appendix 2 contains the comparison with ISO 31000

COSO

The Risk IT Practitioner Guide[3] appendix 4 contains the comparison with COSO

See also

References

  1. ^ a b c d e ISACA THE RISK IT FRAMEWORK (registration required)
  2. ^ George Westerman, Richard Hunter, IT risk: turning business threats into competitive advantage, Harvard Business School Press series ISBN 1422106667, 9781422106662
  3. ^ a b c The Risk IT Practitioner Guide, ISACA ISBN 978-1-60420-116-1 (registration required)

External links