What is a Risk Management Framework

Risk management - what is it?

Risk management involves identifying and assessing risks and developing a plan to minimize or control these risks and their potential impact on companies. Any risk can mean potential loss or damage. Risks can have various causes, such as: B. Legal liability, natural disasters, accidents, management errors or cybersecurity threats.

Enterprise Risk Management: Risk management in companies

Risk management strategies are tactics for dealing with these risks and analyzing their possible consequences. These strategies should be part of a risk management plan, a documented process that describes how your organization / team will identify and manage risks.

ERM (Enterprise Risk Management) is an important part of your business strategy and helps you avoid situations that could affect the success of your company.

Many industries must meet compliance guidelines for ERM as well as standards for risk management. The latter are developed by various organizations such as the National Institute of Standards and Technology and the International Organization for Standardization (ISO).

One industry that has to do with a large number of compliance requirements and guidelines is that of financial service providers. Factors such as securing customer data, investment decisions and also determining creditworthiness contain numerous risks.

The ISO 31000 principles can serve as a risk management framework for a company regardless of the industry. Risk management plans can be systematically implemented with the help of appropriate standards.

IT risk management

In IT, there is a risk of potential loss or damage when a threat exploits a vulnerability in your hardware or software. Common Vulnerabilities and Exposures (CVEs), a list of published vulnerabilities, make it easier for IT professionals to prioritize and remediate threats to make computer systems more secure.

The way in which IT technologies are developed, integrated and managed today is changing drastically. IT security must be integrated into infrastructure, product lifecycles and risk management strategy as early as possible so that your organization is both proactive and reactive can act.

One way to mitigate this risk is to use tools that monitor your infrastructure, e. B. Predictive Analytics and Automation.

With predictive analytics, ops teams can proactively identify and resolve issues before they impact your environment. They can also help you avoid security issues and unexpected downtime by quickly identifying network anomalies and potential vulnerabilities.

Automated processes ensure fast and efficient feedback that accelerates the product lifecycle and can be used to solve problems.

Risk management process

No organization can completely avoid risks, and the consequences of a risk do not necessarily have to be negative. As a company, however, you need to weigh potential risks and opportunities and determine what level of risk is still acceptable. This information can be helpful in the decision-making process.

In risk management, those risks are prioritized that have the greatest probability of occurrence and the most serious potential consequences. These risks are addressed first using risk mitigation techniques.

Steps of risk management:

  1. Risk identification: Identify and describe potential risks. These can include financial, operational (for example in relation to the supply chain), project, business and market risks. Identified risks should be documented in a risk register or in some other way.
  2. Risk analysis: Determine the likelihood of occurrence by identifying the factors and potential consequences of the risk.
  3. Risk assessment: Determine the scope of the risk with the help of internal audits and analyzes. To do this, you need to decide which risks are still acceptable to you and / or which of them need to be mitigated immediately;
  4. Risk reduction: After you have determined the priority and importance of your risks, develop a strategy to minimize or control the risk.
  5. Risk monitoring: Risks need to be continuously monitored to ensure that risk mitigation plans are working and to identify any possible deterioration.

Approaches to risk management

The most important strategies of risk management include avoiding, reducing, transferring and retaining.

  • Risk avoidance: This eliminates and / or avoids any activities that could lead to a risk.
  • Risk reduction: This strategy focuses on actions that reduce the likelihood and / or impact of a risk.
  • Transfer of risk: Here, one organization transfers or shares the risk with another company. An example of this would be the outsourcing of manufacturing or customer services to third parties.
  • Risk retention: This state occurs when the respective organization has assessed a risk and decides to accept it. No risk reduction measures are taken. However, there may still be an emergency plan.

Why Red Hat?

Red Hat tests, secures, and supports open source software to make it business-ready. Our goal is to promote the competitiveness, flexibility and adaptability of your company while at the same time ensuring compliance with legal and safety regulations.

With our solutions, we support teams and risk managers in eliminating and preventing risks in all environments. Red HatⓇ Insights provides predictive analytics with comprehensive assessments and intelligent forecasts in all physical, virtual and containerized environments - in private and public clouds.

Your organization can proactively identify risks as part of your risk management strategy and implement automatic resolution actions with Red Hat® Ansible® Automation Platform Playbooks and Insights for your Red Hat infrastructure.