ZenGRC

Simply Powerful GRC

ZenGRC Team

NIST CSF Categories and Cybersecurity Framework Tiers (Updated 2023)

· ·

One of the most useful and versatile frameworks to help organizations manage cybersecurity risk is the Cybersecurity Framework (CSF) from the National Institute of Standards and Technology (NIST). The CSF consists of best practices, standards, and guidelines to manage cybersecurity program risk. They provide a baseline to build your risk management protocols.

This voluntary framework is divided into three primary parts: the framework core, profiles, and tiers. The NIST CSF core comprises five functions, and each function is further broken down into categories and subcategories. There are currently 23 categories and 108 subcategories in the NIST CSF.

Not every organization needs to use all the CSF’s categories and subcategories to manage risk; in fact, probably no organization needs to use them all. Rather, the categories and subcategories are meant as a menu of options, where each company uses the categories and subcategories most relevant to its own operations and risk profile.

What Are the Five Functions of NIST CSF & What Are the NIST CSF 23 Categories?

The five functions of the NIST CSF, and the categories within each major function, are explored in detail below.

Identify function

Purpose: to Identify the risk to critical infrastructure, information systems, people, assets, and data.

  1. Asset management. Inventory and manage all company assets, including people. It is also important to understand Bring Your Own Device (BYOD) behavior, as this class of devices generally carries a higher level of risk since the equipment isn’t company owned and secured.
  2. Business environment. Understand the company’s mission, why the company exists, who the stakeholders are, and how objectives are accomplished. Understanding the business environment will aid in deciding where cybersecurity program activities are needed and what a potential risk profile looks like.
  3. Governance. Manage and monitor the organization through formal procedures, policies, and processes. Proper governance leads to clear communication channels between management and the board, highlighting risk, regulatory compliance, and overall company operations.
  4. Risk assessment. Assess and manage risk in the organization. Risk management includes people, processes, and technology, right down to individual assets.
  5. Risk management strategy. There is no one size fits all risk strategy. Some organizations are risk-averse, while others tolerate risk better because of the industry vertical or location. Ultimately, a risk management strategy is designed to support operational risk remediation.

Protect function

Purpose: to protect critical services delivery, software development lifecycle (SDLC), and overall engineering of secure information systems.

  1. Identity management and access control. Who has access to what? How did those users get the access, and what are they doing with it? Identity management and access control are at the core of how an organization’s employees are authorized to access applications and data. Multi-factor authentication, just-in-time access controls, password management, and single sign-on are all critical supporting technologies for identity management.
  2. Awareness and Training. How effective are your security controls if your end users don’t know the security basics? Remember, phishing and spoofing are still the most successful attacks against most organizations. User awareness training is a cost-effective way of mitigating many forms of risk.
  3. Data security. The three basics of data security are confidentiality, integrity, and availability. Data should be encrypted and hashed (in transit and at rest) whenever possible, regardless of device type. Rights management is also a good way to protect data, as it verifies the recipient’s identity before access is granted.
  4. Policies and procedures. How successful would a security program be without policies and procedures? Policies should address roles, responsibilities, informative references, and coordination between organizational entities.
  5. Maintenance. A well-oiled machine keeps running, but one without maintenance will eventually fail. Information protection programs require regular reviews and updates to remain operationally effective.
  6. Protective technology. Supporting people and processes with technology assures an organization’s security resilience of information systems and assets.

Detect function

Purpose: to detect the occurrence of cybersecurity events continuously with situational awareness.

  1. Anomalies and events. These need to be detected promptly and their effect on your data, systems, and operations must be well understood.
  2. Continuous security monitoring. Systems and assets must be continuously monitored to identify events and verify the effectiveness of protective measures.
  3. Detection process. Logging, alerting, and reporting must follow a specific detection process that evolves with the emerging threat landscape.

Respond function

Purpose: to respond in the event of cybersecurity events and have a tested contingency plan.

  1. Response planning. In a cybersecurity incident, follow processes and procedures.
  2. Communications. Coordinate response actions with internal and external stakeholders.
  3. Analysis. Verify that response actions and recovery activities function continuously through testing.
  4. Mitigation. Actions to take must prevent the event’s expansion and lead to resolution. Safeguards should be in place to assist in the prevention of expansion.
  5. Improvements. Incident response actions should be examined for potential process improvements.

Recover function

Purpose: to recover from cybersecurity events and maintain plans to restore capabilities to impacted services.

  1. Recovery planning. Recovery processes are similar to carpentry; the saying “measure twice, cut once” applies to procedures focused on restoring information systems or assets affected by an incident.
  2. Improvements. Much like other areas of the framework profile, recovery processes should be reviewed for improvement on an ongoing basis.
  3. Communications. One of the most important aspects of recovering from an incident is well-defined communication channels. People within the organization should know when an incident has happened and what they should or shouldn’t do in response. People outside the organization should also know how the incident might affect them.

NIST Cybersecurity Framework Tiers

The NIST CSF also contains four “framework implementation tiers” to help a company understand the maturity of its cyber risk program and its overall risk posture. The higher the tier you achieve, the more mature your program is.

Tier 1: Partial

This includes informal practices, limited awareness, and sparse cybersecurity coordination.

  • Risk management process. Risk management processes are not formalized, and risk is handled ad hoc and reactively.
  • Integrated risk management program. Limited awareness of cybersecurity risk. Any implemented cybersecurity risk management is irregular, and organizational communication is lacking.
  • External participation. The organization does not collaborate with other entities to better understand the threat landscape.

Tier 2: Risk informed

Management approves the risk management practices, high-level awareness exists, and information is shared and coordinated.

  • Risk management process. Management approves practices, but may not be adopted organization-wide. Information security activities are directly applied.
  • Integrated risk management program. The organization is aware of cybersecurity risk, but the approach is not well managed. There are some small pockets of cybersecurity objectives and programs.
  • External participation. A general understanding of the organization’s role in the larger risk assessment ecosystem exists. Information is available and consumed from external sources but is rarely acted upon.

Tier 3: Repeatable

Formal policies are defined with organizational-wide awareness, implemented processes, and regular formal coordination.

  • Risk management process. Risk management is formally approved and expressed in policy. Practices are regularly updated and change with business requirements.
  • Integrated risk management program. Policies and processes are regularly defined, implemented, and reviewed. Communication is organization-wide.
  • External participation. The organization knows where it stands in the threat landscape. External feeds are generally acted upon and baselined.

Tier 4: Adaptive

Adaptive risk management processes include information security as part of the organization’s cybersecurity culture and promote active information sharing.

  • Risk management process. Previous and current cyber activities inform cybersecurity practices. The threat landscape is examined and the program adapts based on the weather.
  • Integrated risk management program. The organization and cybersecurity are in lockstep. Business units implement best cybersecurity practices as part of the day-to-day business.
  • External participation. The organization understands its role in the cyber ecosystem and actively contributes to improving it.

Framework Profiles

Profiles are an organization’s unique alignment of its organizational requirements and objectives, risk tolerance, and resources to achieve the desired outcomes of the Framework Core. Profiles can be used to identify opportunities for improving cybersecurity posture by comparing a “Current” profile with a “Target” profile.

Implementing profiles allows for prioritization of deployment and remediation of gaps identified during a NIST CSF assessment. The key point to remember about profiles is optimization: you want to use the NIST framework to help the organization improve its cybersecurity, rather than bend your operations to comply with a rigid architecture that doesn’t make sense for your business.

NIST Cybersecurity Framework Core 2.0: What to Expect

To stay ahead of developing cyber threats and new cyberattacks, NIST is updating its Cybersecurity Framework Core to a 2.0 version. This includes incorporating feedback and suggestions from stakeholders and experts across the information security industry to create a stronger, more universal framework.

Business owners and IT professionals can expect modifications from CSF 1.1 (the version used today) that increase clarity, ensure a consistent level of abstraction, and address technology changes for improved national and international cybersecurity. The goal is to make CSF 2.0 easier and more accessible to implement than its 1.1 predecessor, so that CSF 2.0 can endure without major changes for at least a decade.

Manage Cybersecurity Risk with ZenGRC

With ZenGRC, you can keep all your cybersecurity frameworks in one platform, helping you to adapt to growing risks and updated compliance requirements in real time. Maintain standards, share reports, and run regular internal audits all from one place with simple, user-friendly integration. ZenGRC’s unified contextual insight helps you do more than just see the current cyber risk—it helps you understand it.

Schedule a demo today.

What is the CISO’s Role in Risk Management?

· ·

The chief information security officer (CISO) is a relatively new type of C-level executive. As cyber threats have grown in recent years, to the point that poor cybersecurity can jeopardize a company’s strategic goals, boards and CEOs have come to understand the need for a senior-level executive to run security operations and manage vulnerabilities in their IT infrastructure.

A large part of the CISO role lies in compliance activities, such as helping the company to meet its obligations under the General Data Protection Regulation (GDPR) in Europe. That said, as the nature of cyber threats keeps expanding, CISOs are increasingly important to overall risk management – implementing programs to protect the company’s supply chain, assure business continuity, and prepare incident response.

Why Is Risk Management an Important CISO Duty?

The CISO is the executive responsible for maintaining a company’s information security policies, regulatory compliance, and, in the event of a security breach, implementing disaster recovery protocols. The CISO might report to the chief information officer (CIO) or chief security officer (CSO), or even to the CEO or board directly.

As standards and regulations evolve to respond to new digital threats, so too do the requirements for CISOs. For example, several regulations and industry standards mandate that CISOs engage in effective risk management:

While ISO and HIPAA require a risk management approach to information security, they don’t expressly require a CISO to fulfill that obligation. Other standards do incorporate the term “CISO” in their language:

  • NIST 800-53 defines the roles and responsibilities for CISOs, including the security management within NIST’s tiered risk management approach for a successful continuous diagnostics and mitigation (CDM) program

Beyond regulatory compliance, CISOs play an increasingly larger role in risk management because cyber threats now constitute a bigger risk to companies than ever before. The CISO has never had a larger role to play.

What Are the Primary Risk Management Functions of the CISO’s Job?

The CISO has many responsibilities, from monitoring security risks and managing the threat landscape to engaging with stakeholders to ensure regulatory compliance across all levels of the organization. Breaking out one part of the role as the most important is difficult.

Your CISO needs to be able to review a variety of risks inherent in the current IT landscape.

  • Critical systems and data. Increased use of information technology and data requires that you determine what information assets, networks, and systems are critical to business operations. The CISO must ensure the company has the correct data security architecture in place so the business can run smoothly.
  • External threat management. The increased sophistication of malicious actors requires a robust security strategy, security program, and protocols that regularly update systems and software.
  • Internal threat management. Role-based authorizations and multi-factor authentication establish internal controls over system and network access.
  • Vendor risk management. Increased reliance on vendors to manage data collection, transfer, and storage requires companies to monitor and manage their security controls to protect your information.
  • Continuous monitoring. Automating the monitoring of internal and external controls enables better identification of network vulnerabilities.
  • Business continuity and incident response. The increased sophistication and frequency of cyberattacks requires CISOs to establish and enact appropriate strategies to manage the impact these risks pose.

Successful CISOs take an active approach, constantly scanning the horizon for evolving security threats. This allows them to prevent cybersecurity problems and to have the right security initiatives in place to respond when incidents occur.

To Whom Should the CISO Report?

As awareness of cyber risk has grown in recent years, so too has the seniority of CISO, with more and more business leaders recognizing the need to build their information security awareness. Current best practices suggest the CISO should now report directly to the chief executive officer (CEO), to solidify the role’s importance within the organization.

It may also be wise to keep the CISO and CIO roles. As CIOs often purchase and manage IT assets, a conflict of interest could arise when one person is trying to balance security and replacement costs. When you separate purchasing, deployment, and security duties, that can drive better risk management within your organization.

When Should the CISO Report to the Board of Directors?

It’s a testament to the evolution of the CISO role in recent years that the Institute of Internal Auditors (IIA), Information Systems Audit and Control Association (ISACA), National Association of Corporate Directors (NACD), and Internet Security Alliance (ISA) all focus on the importance of cybersecurity corporate governance in their regulations and standards.

Having the IT security team meet with the board of directors helps both parties to engage in the appropriate risk assessment and risk management strategies. Your CISO needs to communicate the internal, external, and vendor risks clearly, so the board can participate in the required corporate governance.

The Sarbanes-Oxley Act requires your board of directors to exercise oversight. If directors can’t do that, they are not meeting their obligations and may incur monetary penalties or jail time.

How ZenGRC Enables CISO Risk Management

Wherever you are in your risk management journey, our easy-to-use content gives you guidelines for assessing and managing corporate risk.

ZenGRC allows you to incorporate vendor management into your business processes more rapidly. Our Payment Card Industry Data Security Standard (PCI DSS)-aligned questionnaires and task reminders enable faster risk documentation tracking.

ZenGRC’s reporting tools provide easy-to-digest reports with graphics that clearly explain your risk profile, giving your board the information they need while saving you time. It also streamlines reporting to your internal auditor.

ZenGRC provides a single source of truth by aggregating all records, reports, policies, procedures, and control listing in one place. Streamlining the audit process not only saves time and money, but also leads to stronger audit outcomes.

Schedule a demo to learn how ZenGRC can help your company manage enterprise risk.

Key Steps to Manage Operational Risk

· ·

As the repercussions of the Covid-19 pandemic linger, many organizations are still concerned about the pandemic’s long-term effect on business operations, continuity, and service delivery.

Senior leaders must manage operational risk to mitigate those effects today, and to protect the organization from other unexpected shocks in the future. If executives don’t do that job well, their missteps could lead to risk events that disrupt operations, hurt the bottom line, and perhaps even cause organizational failure.
In this article, we share some key strategies for optimal operational risk management in a post-Covid world.

The Impact of Covid-19 on Operations and Supply Chains

For many years, pandemics were a low priority in the threat catalogs of corporate organizations. Then came Covid-19, and within a matter of weeks those same organizations had to revise their operating objectives and procedures dramatically.
Specifically, business continuity pushed aside cost-cutting, efficiency, and productivity as a top organizational concern. Now continuity is likely to stay a top concern for many years to come.

In this challenging landscape, organizations must find ways to assure operational continuity. To do that, it’s crucial to manage operational risk.

What Is Operational Risk?

Before unpacking the risk management process, let’s first understand what “operational risk” really means. Simply put, operational risk is the risk of losses resulting from disruptions to business processes and internal operations.
Considered a subset of enterprise risk management, operational risk can result from:

  • A breakdown in internal procedures
  • Human error
  • Disruption to business practices
  • System failures
  • External events (such as natural disasters or, yes, a pandemic)
  • Inadequately trained staff
  • Employees’ participation in fraudulent activities
  • Cyberattacks and data breaches

In general, operational risk can come from:

  • Technology
    • Hardware
    • Software
    • Cybersecurity
    • Privacy
  • People
    • Employees
    • Vendors
    • Customers
    • Other stakeholders
  • Regulatory and compliance demands

The practical upshot: ongoing operational risk management is essential to minimize the threat of operational risks.

What Is the Objective of Operational Risk Management?

Any operational risk can impose financial costs, either from goods and services not delivered to customers or extra expenses for your employees to handle the disruption. Operational risk can also have other repercussions more difficult to quantify. For example, disruptions to your delivery schedule might tarnish the organization’s reputation with customers. If you are able to effectively manage operational risk, you can mitigate those second-order effects of reputational and financial risks.

So how do we go about solving this problem? The following section describes a step-by-step process breakdown for effective operational risk management.

A Five-Step Process for Effective Operational Risk Management

You can never eliminate operational risk completely, so operational risk management (ORM) focuses on reducing and mitigating key risks related to the organization’s day-to-day operations. ORM never ends, since operational risks are constant, pervasive, and varied. The ORM process includes five stages.

  1. Risk Identification

    Identifying operational risks in the context of the organization’s objectives and goals is the natural first step to risk mitigation and reduction.

  2. Risk Assessment

    After all the operational risks are identified, evaluate them based on the potential harm and likelihood of occurrence. This activity helps the organization to understand which risks should be prioritized, and why.

  3. Risk Measurement and Mitigation

    In this stage, compare the cost of risk control to the cost of potential risk exposure. Then choose how to mitigate the risk:

    • Transfer the risk to a different organization, such as an insurance company;
    • Avoid the risk, such as by choosing a vendor with more robust internal controls for cybersecurity;
    • Accept the risk if the benefits outweigh the costs;
    • Control the risk to decrease its harm.

  4. Control Implementation

    Implement the necessary controls to mitigate or minimize the risk.

  5. Risk Monitoring and Reporting

    Monitor the risks continuously to determine whether there are any changes to their prevalence and severity. Your original list of identified risks should be reviewed and updated on a regular basis.

Operational Risk Management: Four Guiding Principles

The operational risk management process is guided by four principles.

  1. Accept No Unnecessary Risk

    Any risk that will not contribute meaningfully to the task, project, or objective is unnecessary and may even jeopardize the organization. Such risks should not be accepted.

  2. Accept Risk When Benefits Outweigh Costs

    If the sum of benefits clearly outweighs the sum of costs, the risk should be accepted. If the costs outweigh the benefits, the risk should be rejected.

  3. Make Risk Decisions at the Appropriate Level

    The person(s) in the appropriate decision-making role should understand the risk, allocate the right resources to reduce it, and implement the necessary controls.

  4. Anticipate and Manage Risk by Planning

    Plan thoroughly to identify possible future risks and create a mitigation plan.

Operational Risk Management Challenges

Managing operational risk depends heavily on your organization’s ability to understand the issues involved and to adopt ORM throughout the organization. Some of the most common challenges organizations face in determining and mitigating operational risk are listed below.

  • Aligning operational risk management within the aggregate enterprise risk strategy
  • Failure to continuously monitor and detect new risks
  • Continued use of legacy technologies
  • Lack of funding, resources, and poor communication

For an in-depth understanding of these challenges, we put together a guide outlining these challenges to operational risk management in a separate article. So how do we overcome these challenges while preparing for operational risk? The next section discusses best practices in ORM.

Operational Risk Management: Best Practices

Even though ORM is a compelling idea, several barriers make it challenging to manage operational risk: competing priorities, a lack of awareness, difficulty allocating resources, and an inability to perceive value in the operational risk framework.

The lack of standardized risk assessment processes and measurement methodologies, as well as complex ORM programs, can also hinder organizations’ ability to manage operational risk.

Nonetheless, by following these five best practices, enterprises can effectively manage operational risk initiatives and assure business continuity:

  1. Implement Risk Accountability

    Every employee must be held accountable for risk management, although the extent for each individual can vary. Enterprise-wide accountability helps incorporate integrated risk management elements into day-to-day activities and promotes a beneficial risk-aware culture.

  2. Champion ORM From the Top

    Senior management must champion the risk management program for it to be truly effective.

  3. Conduct Timely Risk Assessments

    Regular risk assessments help keep the enterprise risk profile and key risk indicators up-to-date and allow ORM leaders to incorporate relevant changes without unnecessary delays.

  4. Quantify and Prioritize Risks

    All operational risks must be quantified in their probability, severity, and mitigation costs.

  5. Implement Strong Controls

    Controls and metrics help with the ongoing management and active mitigation of identified priority risks. Automation and artificial intelligence tools can perform continuous control self-assessment and monitoring to reduce manual work.

These best practices are a perfect starting point for any type of business. Individual industries may have additional considerations, whether that’s a financial services institution trying to reduce operational risk or a manufacturing facility looking to maintain business continuity.

Manage Operational Risk With ZenGRC

Evaluating your operational risks, developing internal controls, and creating documentation every step of the way can be cumbersome and time-consuming if you’re trying to do it all manually via spreadsheets.

ZenGRC can enable you to streamline operational risk management by automating many of these manual tasks.

ZenGRC offers easy-to-use operational risk management templates that empower you to evaluate risk on a comprehensive level. At the same time, our user-friendly dashboard shows you where your gaps are and where you’re doing well, so you are always aware of your risk posture.

Say goodbye to the burden of operational risk management, and find your zen. Schedule a demo of our software today to learn more.

Risk Assessment Methodology for Information Security

· ·

If your IT stakeholders want a stronger grip on cybersecurity and compliance risk, performing an information security risk assessment is where you begin. This post explores the methodology one should use for that risk assessment, including the different approaches to building a strong information security management program.

How Do You Conduct an Information Security Risk Assessment?

When conducting an information security risk assessment, you first need to identify and understand all the risk-prone IT assets in your enterprise. This step allows you to analyze the weaknesses of each asset in detail, which then lets you understand how to remediate them. These are separate activities in an assessment, and are respectively known as risk assessment and risk analysis.

  • A risk assessment identifies and catalogs all the potential risks to your organization’s ability to do business.
  • Risk analysis then examines each identified risk and assigns a score to it, using one of two scoring formulas: quantitative or qualitative.

Let’s take a closer look at both methods, and how risk managers use each one to understand information risk and then develop strong compliance programs and internal controls.

Qualitative Risk Analysis

A qualitative risk analysis evaluates the danger of a risk based on its possible outcomes and consequences, and categorizes risks by whether they are source-based or effect-based.

A source-based risk is one that arises from internal vulnerabilities within an organization’s IT infrastructure. Examples include flawed access controls, ineffective firewall configurations, or inactive password restrictions. Effect-based risks, in contrast, occur as a result of an external factor that is introduced to the organization and creates vulnerabilities, such as a new privacy regulation.

Qualitative risk assessment is subjective and based on employees’ judgments and experience. Each risk might be ranked with adjectives such as “low,” “medium,” or “severe,” for example.

Quantitative Risk Analysis

Quantitative risk analysis assigns a numerical value to each risk using algorithms and actuarial information.

A quantitative approach helps risk managers to determine the level of risk via a risk assessment matrix on a scale from low to high risk. These risks might be ranked along the lines of “10 percent probability” or “85 percent likely,” for example.
Using the risk matrix, senior management can make informed decisions about the IT security controls that might be necessary.

IT Risk Assessment Tools

Both qualitative and quantitative analysis support the risk management process because they illuminate your business’s risk profile from different perspectives.
Assessments like those described above help the security team to build a risk profile comparing an IT asset’s value against the potential losses a risk might bring about. That insight also helps risk managers understand which mitigation steps and security policies are effective, and which ones aren’t.
Now that you have a good understanding of the types of risk analysis, let’s move on to the tools that can help you perform a risk assessment.

ISO 27005

ISO 27005 is a standard from the International Organization for Standardization that provides a framework for risk management, but not a specific approach. In other words, it outlines what the risk assessment needs to include, but provides no specific steps to take.
ISO 27005 provides guidelines for defining how risk management relates to your business processes. That, in turn, provides the basis for creating the actual criteria and deliverables for information security risk management. Criteria might include:

  • Identifying the impact of specific risks
  • Estimating an acceptable level of risk
  • Determining what the organization’s risk management objectives should be

ISO 27005 isn’t an approach to determine risk tolerance per se; senior executives or the board of directors should do that. Rather, ISO 27005 is important for risk management because it outlines all areas and risks to be reviewed.

NIST SP 800-30

The National Institute of Standards and Technology published NIST SP 800-30, which defines nine steps in the risk assessment process and explores related subjects such as risk evaluation and mitigation.
The nine steps are:

  1. System characterization
  2. Threat identification
  3. Vulnerability assessments
  4. Control analysis
  5. Likelihood determination
  6. Impact analysis
  7. Risk determination
  8. Control recommendations
  9. Results documentation

Unlike other risk assessment guidelines, NIST SP 800-30 lays out a risk management framework for carrying out the three parts of risk assessment: preparing for the assessment, conducting it, and maintaining the risk assessment report after completion.

NIST SP 800-30 also explores how other organizational risk management processes complement and inform each other. It could also be a complementary approach to other industry data security standards and data privacy regulations, such as PCI DSS (for credit card data) or HIPAA (for personal health information).

What Is a Security Risk Assessment Checklist?

Regardless of the framework you use for security risk assessment, you still need an approach to identify security risks and put an action plan in place to mitigate these risks.

By using a comprehensive risk assessment checklist, you would be able to assure that all IT teams follow a standardized process. Such a checklist needs to be tailored to the unique needs of your organization and the type of assets managed within your information systems. To start with, it needs to follow this baseline checklist structure:

  1. Compile a catalog of all IT assets.
  2. Identify the risks from a security, cyber security, and privacy perspective.
  3. Analyze existing internal controls to identify vulnerabilities and potential threats.
  4. Assess and prioritize the impact of these threats to implement control recommendations and safeguards.
  5. Repeat the checklist actions at regular intervals.

For a detailed walkthrough of these steps in your checklist, we compiled a comprehensive compliance risk assessment checklist for your reference.

Managing Risk with ZenGRC

When it comes to IT risk assessment (and cybersecurity risk assessment in particular) to prepare adequately against cyber attacks, security incidents, and sensitive data breaches, you can’t leave anything to chance. Errors and omissions from manual processes and inexperienced hands can be costly and detrimental to your business reputation.

That’s why we recommend the ZenGRC risk management software. ZenGRC’s user-friendly dashboards show you what your security posture looks like and which risks need mitigating from security threats, all while tracking workflows and storing the documents needed at audit time.

Schedule a demo to witness ZenGRC in action.

The ISO 31000 Risk Management Process

· ·

ISO 31000 is an international standard for risk management. It’s intended to help organizations (of any industry) with decision-making, risk analysis, and risk treatment.

Fundamentally, the risk management process endeavors to identify risk and then implement a management system to minimize the chance of that risk occurring-or, if the risk does occur, to reduce its harm and assure a speedy recovery. ISO 31000 provides a framework for organizations to assess their current risk management processes and make necessary improvements.

What is ISO 31000?

ISO 31000 is a risk management standard published by the International Organization for Standardization (ISO). It was first released in 2009, with the most recent edition (at the time of writing) in 2018. It offers a collection of recommendations designed to help firms streamline risk management.

ISO 31000:2018 is a single standard within the broader family of risk management standards known as ISO 31000. The risk management standards are all intended to be applied extensively across diverse sectors, niches, and company kinds, to give the best practice framework and advice to all operations wanting to employ risk management concepts.

There are two scopes associated with risk management. ISO 31000 describes them as:

  • A risk management framework. This provides the foundations and organizational arrangements for designing, implementing, monitoring, and continually improving risk management throughout the organization.
  • A risk management process. This is the set of management policies, procedures, and practices that ensure effective risk management. Ideally, the risk management process is guided by the risk management framework.

In other words, ISO 31000 offers a set of best practices so an organization can formalize its risk management practices. This approach is intended to facilitate the broader adoption of enterprise risk management by companies struggling with multiple “silo-centric” risk management systems.

Why is ISO 31000 Important for Risk Management?

Several elements of ISO 31000 attempt to help businesses integrate the ISO standard into their business plans. It’s important to note that ISO 31000 isn’t meant to replace an organization’s business plan but rather to integrate risk management principles into that plan. Risks such as damage to equipment, injury to staff or customers, and financial losses are all examples of what a business might seek to prevent.

The risk management process typically begins with a risk assessment. Included in the risk assessment is the identification of risk, an analysis of the risk, and an evaluation of that risk.

Following the risk assessment, an organization will decide what risk treatment to approach and then monitor and review the risk and results. Establishing the context of the risk and then choosing the communication and consultation surrounding the risk are also necessary steps to a sound risk management process.

Benefits of ISO 31000

Apart from simplifying the deployment of a risk management framework by handling the majority of the organizational and conceptual heavy lifting, it may also assist with the following:

  • Because ISO is a globally recognized emblem of quality standards, it provides you with a competitive edge.
  • Increase employee awareness of organizational risks by incorporating them into the management framework and empowering them to take responsibility for the processes they frequently use.
  • Increase stakeholder confidence by remaining transparent and disclosing risks (and demonstrating risk responsibility and mitigation)
  • Encourage workers to look ahead by pushing them to consider all possible outcomes of a particular circumstance.
  • Improve business culture by bringing various divisions together to discuss new ideas and examine how they may operate more successfully.
  • Increase the success rate of all corporate activities by focusing on the process, looking ahead rather than back, and giving people ownership of their job obligations.

What Are the Components of ISO 31000?

The ISO 31000 risk management approach has two key components:

The Framework

The ISO 31000 Framework is modeled after the Plan, Do, Check, Act (PDCA) cycle, which is used to create all management systems. “This Framework is not designed to prescribe a management system, but rather to help the business integrate risk management into its overall management system,” according to the ISO. This remark should encourage businesses to be adaptable in integrating framework parts as needed.
The Framework’s major components include the following:

  • Governance and policy. Establishes the mission and displays the organization’s commitment
  • Program design. Design of the overarching framework for continuous risk management
  • Implementation. Putting the risk management framework and program in place
  • Monitoring and evaluation. Oversight of the structure and performance of the management system
  • Continuous Enhancement. Enhancements to the overall management system’s performance

Organizations, particularly those with no experience with management systems, should plan to spend significant time developing a solid framework and resist the temptation to go right into the risk assessment process. Process design is critical because the Framework offers the consistency and continuity needed to develop a program rather than merely completing a project.

The Process

An organization is ready to construct the Process after creating the risk management Framework. ISO 31000 says the process is “multi-step and iterative; meant to identify and assess risks in the corporate environment.”

Regular communication is crucial early in the Process for understanding stakeholders’ interests and concerns and thereby confirming the Process’s emphasis. Later on, constant communication aids in conveying the reasoning behind decisions and why the firm requires particular risk remedies.

Furthermore, a constant inspection ensures that the company responds to changes in the risk environment and processes and that controls function properly.

Together, these actions guarantee that all stakeholders clearly understand what is expected of them and that the organization responds to change as rapidly as feasible.

The actual risk assessment process begins with the definition of what ISO 31000 refers to as the “context.” The context is a synthesis of the external and internal surroundings as they relate to corporate goals and tactics.

The context-setting process begins with evaluating the organization’s internal and external surroundings during the Framework phase. Still, management should continue this assessment in greater depth here and focus on the scope of the specific risk management Process.

The subsequent phases in the assessment process entail establishing procedures for identifying, analyzing, and evaluating particular risks.

Risk Management in More Detail

Establish the context of the risk. This step selects a basic risk and places it within some specific part of your enterprise; then, you can apply risk management principles. For example, you could assess the risk of fraud and then specifically examine the potential for fraud within the accounting and financial reporting functions. The more precisely you can identify the corporate level, division, or business unit that will go through the risk management process, the better.

Risk Identification

Identifying risk can be challenging, especially for risks that are difficult to predict-such as a zero-day malware attack or a natural disaster. (This is often described as the effect of uncertainty; you know the risk but have little sense of how probable it is.)

ISO 31000, as an international standard, addresses this by collecting an enormous amount of perspective from various organizations, which may have experiences other organizations do not. Comparing experiences helps companies identify risks that they may have yet to understand.

Risk Analysis

An analysis of the potential risk is necessary to determine what the risk is and assists in implementing effective risk management. For example, if an organization has a backup power generator, executives will need to decide where the fuel for that generator will be stored. Keeping combustible material close to the generator might be unwise. An analysis of that decision would point out that the spark plugs of the generator have a chance of igniting fumes of closely stored fuel and causing an explosion.

Risk Evaluation

This step essentially assigns a grade to the risk: Is it high, medium, low, or something else? Again, using our fuel generator example: if the fuel is stored in a tank five feet away from the generator, that could put the fuel at high risk of igniting and exploding.

Usually, one part of the risk evaluation includes the potential physical and financial damages the threat poses to the business. In our generator’s case, the chance of an explosion would be high, and the likelihood of bodily harm and structural damage would be high too. Executives could model those costs (lost revenue, pain and suffering lawsuits, repair costs) to estimate the total potential damage from the risk.

Risk Treatment

Deciding how to treat specific threats is a crucial part of risk mitigation, and usually, the decision is made by a team of risk managers or consultants.

The generator and fuel example would depend upon the expertise of a fire chief inspecting the site and determining the safe distance to store the fuel. The chief may recommend that the fuel be stored in an underground tank, or that the organization use an alternative fuel source, or propose other mitigation steps.

Communication and Consultation

We see examples of communication and consultation about risk throughout daily life. For example, warning signs around the generator and fuel tank would be one way to communicate the danger and risk surrounding that specific asset. In addition, assigning a periodic inspection from a certified professional to ensure the assets function safely is an example of a consultative step in the risk management process.

Monitoring and Review

A periodic inspection and certification of safety equipment is a consultative action and a monitoring step. That is a crucial part of risk management, too: revisiting your risk management efforts to ensure that they still effectively address the risk in question.

For example, if technology changes and combustible fuels are no longer needed, the risk of storing those fuels would no longer be necessary. Therefore, the fuel could be removed, and the annual inspections discontinued.

How ZenGRC Can Improve Risk Management

Meeting the standards of ISO 31000 is no easy task. It requires significant coordination across the enterprise, with extensive demands for documentation of risks, controls, testing, and remediation work.

With ZenGRC, you can leverage one platform for all your control, compliance preparedness, risk, governance, and policy management needs. ZenGRC provides your business with a single, integrated experience that reveals all risks across your business; and provides an easier, more automated path toward ISO 31000 implementation.

ZenGRC simplifies internal audits and preparation for external auditing with complete views of control environments, easy access to information necessary for program evaluation, and continual compliance monitoring to address critical tasks at any time.

Worry-free risk management is the Zen way! Learn more by scheduling a free demo today.