Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Enterprise risk management: Get started in six steps

Derek Slater | Sept. 8, 2010
If you're at a big company, ERM might seem daunting because of silos, inertia and so on.

FRAMINGHAM, 7 SEPTEMBER 2010 - Let's say your organization doesn't have a formal enterprise risk management program. If you're at a big company, ERM might seem daunting because of silos, inertia and so on.

If you're at a small company, you might think you lack the resources to pull it off.

I propose that ERM is worth doing and doesn't have to be so complex if you simply "begin with the end in mind," as Stephen Covey says in The 7 Habits of Highly Successful Security Leaders. Or would have said if he'd written such a book.

The basis of my thoughts is COSO's ERM framework. Here is the end to keep in mind as you begin your ERM efforts, taken from COSO's work:

You want to create

* a process

* that can be applied to strategy-setting

* in order to achieve business objectives.

COSO says the goal of ERM is "to provide reasonable assurance regarding the achievement of entity objectives." Translation: The goal is to enable the business. That should be your security department's goal, and (critically) your CEO must know that it's your goal. That's why I like COSO's formulation of ERM. It communicates to the business that you are working to help them achieve their objectives.

So here's an exercise that can help you begin to devise and refine a process that can be applied in strategy-setting. It doesn't require any org-chart-jitsu. It's just a beginning, but it can be a beginning that yields immediate payoff. And that will help gather support for more formal efforts down the road.

The exercise--the process--consists of six steps. Let's choose internal investigations as the first business activity to which we'll apply these steps. The six steps are based on COSO's seven components of ERM, modified for this beginner's exercise.

Step 1. Create a working group that includes a representative from every department that plays any role in internal investigations. This might include HR, corporate security, information security, facilities, finance and legal.

Step 2. Brainstorm (i.e., red team) events and scenarios that could create risk for the company in an internal investigation. Such events might include information leaks in various departments or a potentially violent suspect.

Rank the risks by likelihood and impact. Absolute precision is not necessary here, although this step may provide the impetus to gather new metrics, both within your business and from the outside world for benchmarking purposes.

Step 4. Now for controls and solutions: List existing controls. Look for redundancy across departments. Brainstorm new ones to address these risks. Rank new controls based on cost, difficulty, and effectiveness--especially noting controls that can reduce likelihood and impact across multiple types of event. With good luck, you might be able to pay for a new control by reducing the redundancy of existing controls.


1  2  Next Page 

Sign up for Computerworld eNewsletters.