Most companies today are using cyber security measures for safeguarding their software solutions, policies, and protocols. This might give an illusion to the executive management team that their digital data is secure. But this is not the case.
The common risk management practices which we use today are not sufficient to prevent a crisis-inducing error or a data leakage event. These risk management practices often become a barrier to achieving a strategic business outcome.
Associating cyber security with digital risk management is a catastrophic mistake. Cyber security is only one element of the comprehensive strategy in digital risk management. It is required to effectively manage digital risk across an enterprise.
The following are some of the key challenges CEOs and business leaders are facing while implementing common risk management practices:
- Many CEOs and senior business executives are hard-wired to seek out growth opportunities that will add value to their companies. Also, risk management and security professionals are hard-wired to find ways to minimize losses that will erode value.
- Digital risk leaders lack an enterprise-wide view of risk which is significant in bridging the communication gap with CEOs. It is also required to articulate the potential risk impact on the business outcomes that their organizations value most.
- When considering risk treatment options, organizations often fail to define their appetite for risk and the value of an opportunity at a strategic level.
Digital risk management (DRM) is a complex endeavor requiring real-time monitoring of strategic information architecture. The four critical pillars of digital risk management include:
- Cyber Security: This includes protocols around system breaches and incident management for preventing exploitation.
- Data Loss Prevention: This includes the measures that protect against system failure, corruption and accidental overwriting and deletion.
- Data Leakage Prevention: This includes those protocols that ensure that users do not send confidential information outside of the organizational network.
- Governance: It consists of the procedures and policies with respect to obligation, regulation, compliance, client contractual requirements and data custodianship.
DRM is defined as the integrated management of risks associated with digital business components such as cloud, mobile, social, big data, and third-party technology providers. While implementing DRM in your organization, you must consider the following two factors:
1. Shift the Focus
We recommend you that you must shift your focus on ‘good risks vs. bad risks' rather than focusing on ‘high risks vs. low risks’. Some of the high risks may actually be good risks when fully evaluated against the value created and the company's understanding. Thus, you must categorize your risks into good risks and bad risks. Many of these good risks lie at the heart of innovation. This kind of innovation has driven companies like Apple, Google and others to dominate the market.
2. Analyze the Options
Many risk evaluation models identify risks as high or low, based on the likelihood and impact associated with the risk. The main goal of these models is to minimize the potential for a loss that occurs. But, these models often result in a risk-averse posture that leads to missed opportunities from a business perspective. Hence, you must first focus on the desired business outcome, and construct a strategic risk evaluation model that will encourage business leaders and CEOs to recognize the opportunity or value in their business outcomes. Once you have a correct focus and a strategic course of action, you can identify the specific digital risk management methods for your digital business initiatives.