Deep visibility into ERM- IRM -ISRM.

What are the differences between ERM and IRM?

Today’s business environment is complex and interconnected. Financial institutions are complex organizations confronting numerous internal and external risks that can substantially influence their operations and success.

Enterprise Risk Management stands out as a vital strategic tool to measure, mitigate, and manage these uncertainties.

ERM (Enterprise Risk Management) and IRM (Integrated Risk Management) are both frameworks used by organizations to manage risks, but they have distinct characteristics and approaches.

Enterprise Risk Management (ERM)

• ERM is a comprehensive, organization-wide approach to identifying, assessing, and managing risks that can affect the achievement of an organization’s objectives.
• ERM focuses on all types of risks (strategic, operational, financial, compliance, etc.) across the entire organization.
• Typically follows established frameworks like COSO ERM or ISO 31000, which provide structured methodologies for risk management.
• The primary objective is to enhance value by managing risks and opportunities to achieve organizational goals.
• Top-down approach: Initiated and driven by senior management and the board of directors.
• Integrated into strategic planning and decision-making processes.
• Comprehensive risk reporting to senior management and the board.
• Emphasis on risk aggregation to provide a holistic view of the organization’s risk profile.
• Promotes a risk-aware culture throughout the organization.
• Focus on embedding risk management into the organizational culture and
• processes.

Integrated Risk Management (IRM)

Integrated risk management is an organization-wide approach to addressing risk involves input from all teams and centers risk as a fundamental part of business strategy.  

Effectively, IRM ties together three risk management program areas — technology/cyber risk, operational risk, and enterprise/strategic risk.

• IRM is an evolution of ERM that emphasizes a more holistic and integrated approach to managing risks by leveraging technology and data.
• Like ERM, IRM covers various types of risks but places a stronger emphasis on integration and collaboration across different risk functions and departments.
• Utilizes technology platforms and tools to provide a centralized view of risks and enable better collaboration and communication.
• Often aligns with digital transformation initiatives.
• The main objective is to provide a more dynamic and real-time approach to risk management, enhancing decision-making and operational resilience.
• Integrates risk management into business processes using technology solutions.
• Encourages cross-functional collaboration and data sharing to break down silos.
• Leverages real-time data and advanced analytics for risk reporting.
• Provides interactive dashboards and tools for continuous monitoring and response.
• Focuses on fostering a risk-informed culture with an emphasis on collaboration and shared responsibility for risk management.
• Encourages continuous learning and adaptation through feedback loops and data-driven insights.

Summary

While ERM is a top-down strategy that helps manage risk strategically across an organization, IRM is a bottom-up approach to governing organization-wide risk within a single source of truth, rather than centering on a specific team or set of objectives.

·       ERM: Broad, traditional approach; focuses on risk identification, assessment, and management across the organization; driven by established frameworks; promotes a risk-aware culture.

·       IRM: Modern, technology-driven approach; integrates risk management into daily business processes using advanced tools; enhances collaboration and real-time risk management; promotes a risk-informed culture.

And now the question would be whether we

Can adopt the same IRM process to manage the ERM ?!”

Yes, we can adopt the IRM process to manage ERM, and doing so can enhance the effectiveness of ERM. Integrating IRM practices into ERM involves leveraging technology, data, and a collaborative approach to make risk management more dynamic and efficient.

Here’s how we can possibly integrate IRM into ERM:

Integration Approach

• Use integrated risk management platforms to centralize risk data and provide real-time insights.
• Implement tools for continuous monitoring, reporting, and analysis of risks across the organization.
• Utilize advanced analytics, machine learning, and AI to identify emerging risks and predict potential impacts.
• Enable data-driven decision-making by integrating data from various sources (internal and external).
• Break down silos by encouraging collaboration between different departments and risk functions.
• Establish cross-functional risk committees or teams to ensure diverse perspectives and comprehensive risk assessments.
• Use interactive dashboards and real-time reporting tools to provide stakeholders with up-to-date risk information.
• Enhance transparency and accountability by making risk information accessible to all relevant parties.
• Integrate risk management practices into daily operations and decision-making processes.
• Ensure that risk considerations are part of strategic planning, project management, and performance management.
• Promote a culture of continuous learning and adaptation through regular training and awareness programs.
• Encourage employees at all levels to identify and report risks, fostering a proactive approach to risk management.
• Use feedback loops and lessons learned to continuously improve risk management practices.
• Regularly review and update risk management strategies and processes to reflect changing risk landscapes.

What would be the Benefits of Integrating IRM into ERM

·      An integrated risk management framework is the formal, structured approach to governing risk.

·      Applying an integrated risk management framework allows organizations to evaluate their risks by connecting the organization’s objectives, functional departments, and components of a risk assessment.

·      Common industry standards that help to establish robust cybersecurity controls often refer to IRM frameworks.

·      One of the most prevalent is the National Institute of Standards and Technology (NIST) framework for Improving Critical Infrastructure Cybersecurity.

·      The NIST Cybersecurity Framework offers five core functions, helping organizations to streamline the integration of technology risk management throughout the business.

·      Integrated risk management, however, can be hard to distinguish from its close cousins, enterprise risk management (ERM) and governance, risk, and compliance (GRC)

·      Real-time data and advanced analytics enable quicker identification and response to risks.

·      Data-driven insights provide a more accurate understanding of risks and their potential impacts.

·      Automation and centralized platforms reduce the administrative burden and streamline risk management processes.

·      Cross-functional teams ensure comprehensive risk assessments and more effective risk mitigation strategies.

·      Continuous monitoring and adaptation enhance the organization’s ability to withstand and recover from adverse events.

Implementation Steps

• Evaluate existing ERM processes and identify areas for improvement through IRM integration.
• Choose risk management platforms and tools that align with your organization’s needs and capabilities.
• Create a roadmap for integrating IRM practices into your ERM framework, including timelines, milestones, and responsible parties.
• Provide training on new tools and processes to ensure smooth adoption.
• Engage stakeholders at all levels to gain buy-in and support for the integration.
• Continuously monitor the effectiveness of the integrated approach and adjust as needed.
• Collect feedback and iterate on processes to ensure ongoing improvement.

By adopting IRM processes to manage ERM, organizations can create a more robust, efficient, and adaptive risk management framework that is better suited to the complexities and dynamics of the modern business environment.

RMF

why it is not wise that information security risk management used to manage the enterprise risk in the organization?

The Risk Management Framework (RMF)provides a process that integrates security, privacy, and cyber supply chain risk management activities into the system development lifecycle. 

Using information security risk management (ISRM) to manage all aspects of enterprise risk management (ERM) in an organization is generally unwise for several reasons.

While both SRF and ERM are essential for managing risks within an organization, they serve different purposes and are applied in different contexts.

The SRF is more specialized, concentrating on information security, whereas ERM provides a comprehensive framework for managing a wide array of risks throughout the organization. Together, they contribute to a robust risk management strategy, ensuring both the protection of information assets and the achievement of business objectives.

Let us explore the major differences between the two frameworks.

• ISRM Focus: ISRM specifically addresses risks related to information assets, cybersecurity threats, data breaches, and IT infrastructure.
• ERM Scope: ERM encompasses a broader range of risks, including strategic, operational, financial, compliance, reputational, and more. These risks go beyond the scope of information security.
• ISRM: Primarily concerned with confidentiality, integrity, and availability of information.
• ERM: Deals with diverse risks such as market risks, regulatory changes, supply chain disruptions, human resources issues, and environmental risks, which require different approaches and expertise.

·      ISRM Professionals: Experts in cybersecurity, IT governance, data protection, and

related areas.

·      ERM Professionals: Need expertise in various domains such as finance, operations,

compliance, strategic planning, and risk analysis.

·      ISRM Tools: Focus on vulnerability assessments, penetration testing, threat modeling,

and incident response.

·      ERM Tools: Include risk assessments, scenario planning, risk matrices, key risk

indicators (KRIs), and risk dashboards that consider a wider array of risk factors.

·      ISRM: Typically managed within the IT or information security department.

·      ERM: Requires integration across all departments and functions to ensure a

comprehensive approach to risk management.

·      ISRM Reporting: Often technical and focused on IT metrics.

·      ERM Reporting: Needs to be holistic, accessible to senior management and the board,

and inclusive of non-technical risks.

·      ISRM: Often tactical, focusing on mitigating specific threats and vulnerabilities.

·      ERM: Strategic, aligning risk management with the organization’s overall objectives,

mission, and vision.

·      ISRM: Focuses on acceptable levels of information security risks.

·      ERM: Considers the organization’s overall risk appetite and tolerance across various risk

categories, ensuring balanced decision-making.

Examples of Non-IS Risks

·      Financial Risks: Market fluctuations, credit risks, liquidity risks, and financial reporting

risks are critical to manage but fall outside the scope of ISRM.

·      Operational Risks: Supply chain disruptions, equipment failures, and process

inefficiencies require different risk management strategies.

·      Compliance Risks: Regulatory changes, legal obligations, and compliance with industry

standards involve different expertise and approaches.

·      Reputational Risks: Public perception, brand reputation, and stakeholder trust are

crucial but not typically addressed by ISRM.

Conclusion

In my own opinion, while ISRM is a vital component of an organization's overall risk management strategy, it is not sufficient to manage all types of enterprise risks. ERM requires a comprehensive, integrated approach that encompasses a wide range of risks, involves diverse expertise, and aligns with the organization's strategic goals. Using ISRM alone to manage ERM can lead to gaps in risk coverage, misaligned priorities, and ineffective risk management practices. Therefore, it is essential to recognize the distinct roles of ISRM and ERM and ensure they are both appropriately addressed within the organization.

Let us explore something that is critical for the success of implementing any framework any organization, which is the steering committee which provide governance of Risk management.

what are the differences between Enterprise Risk Management and IT risk management steering committee?!

Enterprise Risk Management (ERM) and IT Risk Management Steering Committees are both important aspects of an organization’s risk management framework, but they have different scopes, objectives, and responsibilities.

Enterprise Risk Management ERM, Committee

·  ERM encompasses all types of risks that an organization faces, including strategic, operational, financial, compliance, reputational, and more.

·  It aims to provide a holistic view of the organization’s risk profile.

·  Identify, assess, and manage risks that could impact the achievement of the organization’s objectives.

·   Enhance the organization’s ability to achieve its goals by managing risks and opportunities effectively.

·   Integrate risk management into strategic planning and decision-making processes.

·   Typically includes senior executives and representatives from various functions such as finance, operations, legal, human resources, and more.

·    May involve board members, especially in large organizations, to ensure alignment with overall corporate governance.

·      Establish risk management policies and frameworks.

·      Oversee the implementation of ERM practices across the organization.

·      Ensure risk management is integrated into business processes and strategic planning.

·      Review and monitor the organization’s risk profile and risk management activities.

·      Report on risk management activities to the board of directors and other stakeholders.

·      Broad and includes all risk categories that can affect the organization’s performance and objectives.

·    Ensures a balanced approach to managing different types of risks.

IT Risk Management Steering Committee

·      Focuses specifically on risks related to information technology, including cybersecurity, data privacy, IT infrastructure, and technology operations.

·      Addresses risks that arise from the use, ownership, operation, involvement, influence, and adoption of IT within an organization.

·      Identify, assess, and manage IT-specific risks.

·      Ensure the security, integrity, and availability of IT systems and data.

·      Support the achievement of business objectives by managing IT risks effectively.

·      Typically includes IT executives such as the Chief Information Officer (CIO), Chief Information Security Officer (CISO), and other senior IT managers.

·      May also include representatives from other departments that are heavily reliant on IT, such as operations, finance, and compliance.

·      Develop and implement IT risk management policies and procedures.

·      Oversee IT risk assessments and ensure appropriate mitigation strategies are in place.

·      Monitor and review IT risk management activities and controls.

·      Report on IT risk management to senior management and the ERM committee, if applicable.

·      Ensure compliance with relevant IT-related regulations and standards.

·      Specific to IT and includes areas such as cybersecurity, data protection, IT governance, system reliability, and disaster recovery.

·      Ensures that IT risks are managed in a way that supports the overall business strategy and operations.

what are the differences between ERM Risk Register and IRM risk register?

The ERM Risk Register and the IRM Risk Register serve as tools for documenting and managing risks, but they differ in their scope, functionality, and integration due to the distinct nature of Enterprise Risk Management (ERM) and Integrated Risk Management (IRM).

ERM Risk Register

• Covers all types of risks across the entire organization, including strategic, operational, financial, compliance, and reputational risks.
• Provides a comprehensive view of the organization's risk landscape.
• Typically includes fields for risk identification, risk description, risk owner, risk assessment (likelihood and impact), risk mitigation strategies, and status updates.
• Focuses on qualitative and quantitative assessment of risks.
• Often manually updated, with periodic reviews and updates.
• Part of a broader ERM framework, which may not be fully integrated with other business processes or systems.
• Risk data may be siloed, with limited real-time updates or cross-functional collaboration.
• Periodic reports generated for senior management and the board.
• May lack real-time data and dynamic reporting capabilities.
• Reports are often static and rely on manual data aggregation.
• Primarily used by risk management professionals and senior executives.
• Limited accessibility for broader organizational use.

IRM Risk Register

• like ERM, it covers all types of risks but emphasizes integration and collaboration across different departments and risk functions.
• Utilizes a more dynamic and real-time approach to risk management.
• Enhanced with advanced features such as real-time data updates, interactive dashboards, and automated workflows.
• Integrates risk data from various sources, providing a more comprehensive and up-to-date view of risks.
• Often includes advanced analytics, machine learning, and predictive modeling to identify emerging risks.
• Fully integrated with other business processes and systems, such as enterprise resource planning (ERP), governance, risk, and compliance (GRC) systems, and business intelligence (BI) tools.
• Facilitates cross-functional collaboration and data sharing, breaking down silos.
• Real-time and dynamic reporting capabilities with interactive dashboards.
• Provides actionable insights and allows for continuous monitoring and updating of risks.
• Enhanced visualization tools for better risk communication and decision-making.
• Accessible to a broader range of stakeholders across the organization.
• Encourages a more collaborative approach to risk management, involving various departments and functions.

The main differences are as follows:

• ERM Risk Register: Broad coverage of all organizational risks but may not be as integrated or dynamic.
• IRM Risk Register: Similar coverage but emphasizes integration, real-time updates, and collaboration.
• ERM Risk Register: Basic risk documentation and assessment, often manually updated and reviewed periodically.
• IRM Risk Register: Advanced features like real-time data updates, interactive dashboards, automated workflows, and predictive analytics.
• ERM Risk Register: May operate in silos with limited integration with other business processes and systems.
• IRM Risk Register: Fully integrated with other systems, facilitating comprehensive risk management and collaboration.
• ERM Risk Register: Periodic, static reports for senior management; limited accessibility
• IRM Risk Register: Real-time, dynamic reporting with interactive dashboards; broader accessibility for organizational use.

Conclusion

·ERM Risk Register: A traditional tool focused on documenting and managing risks across the organization, with periodic updates and limited integration with other systems.

·IRM Risk Register: An advanced, integrated tool that leverages technology for real-time risk management, enhanced reporting, and broader accessibility, promoting a more dynamic and collaborative approach to risk management.

In essence, while both registers serve to document and manage risks, the IRM Risk Register provides a more advanced, integrated, and dynamic approach, leveraging technology and promoting collaboration across the organization.

What should be the most appropriate representation in the IRM steering committee? and in the ERM steering committee?

IRM Steering Committee

The IRM (Integrated Risk Management) Steering Committee should have representation from various departments and functions to ensure a holistic and integrated approach to risk management.

Members should include stakeholders who can provide diverse perspectives on risk and who are directly involved in the organization's risk management processes.

Here are the key roles that should be represented:

• Chief Risk Officer (CRO) or Head of Risk Management: Leads the committee and ensures alignment with the overall risk management strategy.
• Chief Information Officer (CIO): Provides insights on IT risks and the integration of risk management with IT systems and processes.
• Chief Information Security Officer (CISO): Focuses on cybersecurity risks and information security management.
• Chief Financial Officer (CFO): Represents financial risks and ensures alignment with financial goals and compliance requirements.
• Head of Compliance: Ensures that risk management practices comply with regulatory requirements and industry standards.
• Head of Internal Audit: Provides an independent perspective on risk management practices and internal controls.
• Operational Leaders: Leaders from key operational areas such as manufacturing, supply chain, and logistics to address operational risks.
• Head of Human Resources (HR): Focuses on human capital risks, including talent management, employee relations, and workplace safety.
• Legal Counsel: Provides insights on legal and regulatory risks.
• Business Unit Leaders: Representatives from various business units to ensure that risks      specific to each unit are considered.
• Data Privacy Officer: Addresses risks related to data privacy and protection.

The above roles and their corresponding functions depend mainly on the organization structure and its complexity.

ERM Steering Committee

The ERM (Enterprise Risk Management) Steering Committee should also have broad representation from across the organization to ensure comprehensive risk management.

The members should include senior executives and leaders from various functions who have a strategic understanding of the organization’s risk landscape.

Here are the key roles that should be represented:

• Chief Risk Officer (CRO) or Head of Risk Management: Leads the committee and oversees the implementation of the ERM framework.
• Chief Executive Officer (CEO): Provides strategic direction and ensures alignment with the organization's overall objectives.
• Chief Financial Officer (CFO): Represents financial risks and ensures that risk management aligns with financial planning and reporting.
• Chief Operating Officer (COO): Focuses on operational risks and the integration of risk management into business operations.
• Chief Information Officer (CIO): Addresses IT and technological risks.
• Chief Information Security Officer (CISO): Focuses on cybersecurity and information security risks.
• Head of Compliance: Ensures compliance with laws and regulations.
• Head of Internal Audit: Provides an independent assessment of risk management practices and internal controls.
• Head of Human Resources (HR): Addresses risks related to human capital, including recruitment, retention, and workplace safety.
• Legal Counsel: Provides insights on legal and regulatory risks.
• Business Unit Leaders: Representatives from major business units to ensure that unit-specific risks are identified and managed.
• Board of Directors (or Board Representatives): Ensures that the board is informed and engaged in overseeing risk management.
• Chief Strategy Officer (CSO) or Head of Strategic Planning: Ensures that risk management is integrated into the strategic planning process.

Conclusion:

• IRM Steering Committee: Focuses on integrating risk management across various functions and leveraging technology. Includes CIO, CISO, operational leaders, and data privacy officers.
• ERM Steering Committee: Provides a comprehensive view of organizational risks. Includes CEO, CFO, COO, CRO, business unit leaders, and board representatives.

Both committees aim to ensure that risk management is aligned with the organization's objectives and integrated into its operations and strategic planning.

I finally see that ERM is an overarching enterprise Risk Governance vehicle, while the IS and or IT risk management still focuses on that side of the business only.

Ala'a Elbeheri, CISA,CRISC,CISM,PCIP,RMP,PMP