What is a risk management framework?

Understanding the risks themselves is only part of the equation; risk management demands that businesses next look at themselves in terms of the likelihood of a specific risk or risk category, and what the organization stands to lose in the event that they encounter the risk. In calculating these risks, businesses must remember to consider the overall impact of the risk. This will help them prioritize risks based on damage potential and likelihood of occurrence to determine their risk threshold.

After identifying and prioritizing risks, the next step is to develop effective risk mitigation plans. A proper risk mitigation plan will allow the business to determine which core risks to accept, which ones to minimize or eliminate, and where to start. At this point an effective issue or POA&M management process should be used for tracking and to establish an audit trail.

Throughout the RMF process, monitoring and reporting remain of paramount importance. Depending on the business and industry, risk management reporting should be automated and accessible real-time via dashboards . These dashboards should be accessed not only by qualified risk personnel who take on the responsibility of adjusting risk-exposure elements to better account for current dangers, but also the front line and C-suite. Any industry specific reports should be created for review and authorization. Proper risk monitoring and reporting may also play a part in maintaining compliance with established standards.

A risk management framework is just that: a framework for supporting and structuring risk management in business. It is not a complete risk management solution by itself; it relies on everyone involved to adopt and follow the practices established in the framework. The governance components in RMF solutions are designed to help employees understand their roles and responsibilities, assign duties, and establish the authority of risk management leaders.

Risk management frameworks exist to help protect every aspect of business from possible dangers. This includes the risks posed by unwanted or faulty products, volatile markets, poorly executed business plans, etc. But with the ongoing proliferation of digital systems, some of the most obvious risks facing organizations today are risks to IT systems.

IT risk management frameworks are designed to help businesses and even government institutions identify possible data risks, determine which systems they pose a threat to, and what options they have for preventing or remediating said risks. The steps across various RMF standards are very similar, let’s take NIST RMF as an example. It is one of the most stringent and used to authorize systems within the U.S. federal government. It can be broken down into five essential stages:

Review and categorize all IT systems within the organization. Define system boundaries and identify which kinds of information types are associated with the system. Likewise, take into account relevant information relating to the organization itself, the system’s operating environment, connections to other systems, and intended use.

Next, choose the right security controls. An organization’s security controls are the management, operational, and technical safeguards available to an organizational information system, designed to help protect the integrity, and availability of the system. Different security controls are naturally more effective for specific kinds of systems and information, and choosing the right controls may mean the difference between adequate protection and system vulnerability. Once the selection is complete, implement the chosen security control and establish usage policies.

With the security controls in place, the next step is to assess their functionality and outcomes. Are the controls correctly installed and operating as intended? If so, are they meeting required security requirements? If not, then the controls will not be as effective at protecting business operations and data.

Once the security controls have been implemented and vetted, it is time to authorize control over the system and allow it to get to work. Correctly implemented, RMF automated workflows will begin operating to help protect the business.

Authorizing system security controls is not the final step in IT risk management; ongoing monitoring of security controls help ensure that the risk management framework remains viable throughout its use life. Document changes, regularly conduct impact analyses, and continue to report on security controls’ statuses to establish ongoing efficacy.

As previously addressed, business risk is everywhere. And, as IT systems expand and evolve, the modern digital business landscape is becoming increasingly complex. The right risk management frameworks help organizations navigate this landscape, providing a number of key advantages in the process.

Top benefits of risk management frameworks include the following:

Modern supply chains are becoming ever more complex, creating significant risk for businesses that rely on them for goods, resources, and product delivery. Effective RMF solutions make it possible for organizations to improve the quality and usability of supply-chain-relevant data streams, such as weather reports, social media trends, world news agencies, and more. As a result, they are better able to gain accurate insights into the factors that may be impacting essential supply chains.

A business is only as secure as its assets. Risk management frameworks help protect those assets, identifying relevant information, understanding and prioritizing risks, and empowering organizations to respond quickly to mitigate and resolve emergent risks. The right framework provides a set of standards and a plan of action to ensure that the business’ most vital assets remain secure.

Risk management frameworks likewise dictate how intellectual property may be protected against theft and misuse. Backed by relevant data and clear standards, businesses can operate, secure in the knowledge that their intellectual property is better protected and the likelihood of theft is minimized.

Having a clear criteria of security and operational standards available and in place through all levels of a business keeps security processes consistent. This improves risk mitigation, and reduces the danger of data exposure. This in turn helps protect the business from costly mistakes that could negatively impact public perception and lead to reputational damage.

In aggressive markets, understanding competitors can be just as important as understanding oneself. Risk management frameworks incorporate disparate outside information sources, such as social media, blogs, news reports, etc., so that organizations can keep a close eye on their competition, and react quickly when necessary.