Risk Transformation

Identifying and analyzing risks and using appropriate methods to limit them adequately is a highly responsible task. Reconciling this complex of issues with the permanent pursuit of shareholder value is a supreme discipline.

Currently, financial institutions have to bear the brunt of recent regulatory changes, virtually all companies operating on a significant scale are facing similar challenges. In different ways and to different degrees depending on the region. These rapidly changing new challenges require a shift in management focus away from risk management as a traditional corporate function to risk management as an innovative discipline embedded throughout the enterprise and viewed as a strategic asset.

 

Requirements for the Company

IT risk management is a critical task that ensures companies safeguard their IT infrastructures and processes against potential threats. Companies are required to implement systematic risk management to protect sensitive data and maintain their IT services. The requirements for the company include:

  • Risk Awareness: Companies must develop an awareness of potential IT risks that may arise from cyberattacks, system failures, data losses, or internal errors.
  • Regulatory Compliance: Companies are required to comply with legal regulations and industry-specific standards, such as the General Data Protection Regulation (GDPR) or industry-specific security standards like ISO/IEC 27001.
  • Risk Assessment: It is necessary to conduct a comprehensive risk assessment regularly to identify potential vulnerabilities and threats within the IT infrastructure.
  • Protective Measures: Based on the risk assessment, appropriate technical and organizational measures must be taken to mitigate the identified risks.
  • Continuous Monitoring: Companies must ensure that the implemented measures are continuously monitored and adjusted to respond to new threats and changes in the IT landscape.
  • Training and Awareness: Employees must be regularly trained to ensure they understand the importance of risk management and adhere to the established security policies.

 

Necessary Steps for Implementation

Implementing effective IT risk management involves several steps:

  1. Risk Assessment and Analysis:
    • Identification and categorization of risks.
    • Assessment of the likelihood of occurrence and potential impact.
    • Prioritization of identified risks based on severity.
  2. Risk Treatment:
    • Development and implementation of measures to mitigate risks.
    • Decision whether to avoid, reduce, transfer, or accept risks.
  3. Implementation of Protective Measures:
    • Introduction of technical safeguards such as firewalls, encryption, and access controls.
    • Implementation of organizational measures such as backup strategies and contingency plans.
  4. Monitoring and Control:
    • Regular review of the effectiveness of protective measures.
    • Conducting penetration tests and audits to uncover security gaps.
  5. Crisis Management and Contingency Planning:
    • Development of contingency plans in the event of a security incident.
    • Implementation of crisis management processes for rapid response to IT incidents.
  6. Documentation and Reporting:
    • Recording and documenting all steps in the risk management process.
    • Regular reporting to management and other relevant stakeholders.
  7. Definition of continuous improvements:
    • Define intervals for the deming cycle to successively improve and adapt risk process management.
    • Organisational framework for the timing of the risk management strategies based on the audit results and new threats.

 

Companies That Must Implement These Requirements

In principle, all companies that rely on IT infrastructures and systems are required to implement IT risk management. It is particularly important in the following industries and for companies of certain sizes:

  • Financial Sector: Banks, insurance companies, and other financial service providers are required to adhere to strict risk management standards due to regulatory requirements such as Basel III or Solvency II.
  • Healthcare: Hospitals, medical practices, and other healthcare facilities must implement particularly stringent IT security measures due to the high sensitivity of health data.
  • Energy Supply: Energy providers must take specific measures to protect against cyberattacks due to the critical nature of their infrastructure.
  • Small and Medium-sized Enterprises (SMEs) and Large Companies: Companies exceeding a certain size are more vulnerable due to their complex IT landscapes and must therefore implement comprehensive risk management.
  • Public Administration: Government agencies and public institutions must conduct strict risk management due to their responsibility to citizens and the handling of sensitive data.

 

Timing of Implementation

The implementation of IT risk management is not just a one-time measure but a continuous process. Companies must take action at various times:

  • Company Founding or Introduction of New IT Systems: A risk assessment should be conducted at the time of company founding or when introducing new IT systems.
  • Regular Reviews: At least annually or during major changes to the IT infrastructure, a comprehensive risk assessment and adjustment of protective measures should be carried out.
  • After a Security Incident: Following an IT security incident, companies must immediately review and adjust their risk management processes.
  • Changes in Legislation: When legal frameworks change, companies must adjust their risk management accordingly to remain compliant.

By systematically and continuously implementing IT risk management, companies can effectively ensure their IT security and meet both legal and operational requirements.