IT Risk Identification

3. What is the difference between risk capacity, appetite and tolerance?

Here we have four concepts that are very confusing for those who are starting to manage risks. So I will explain on this slide and present a chart on the next slide to make it easier to understand what the difference is between risk capacity, appetite and tolerance. Risk capacity means the maximum loss summing up all the company initiatives that an organisation can tolerate without its existence being questioned. No project or initiative should present a risk that is close to the capacity of risks. Understanding this risk capability quantitatively means plugging into company accounting and understanding cash flow. Normally, risk capacity is assessed in qualitative terms, that is, by the maximum level of impact that the company can have. Risk appetite is a subset of risk capacity and is defined as the amount of risk a company is willing to accept in pursuit of its mission; that is, the range of risks considered normal by the organisation culture of the company. The higher the risk appetite, the greater the possibility of gain and the greater the likelihood of loss. Achieving a level of corporate maturity where there is collective awareness of the level of risk appetite is difficult. It must be built with patience. It is important to understand that risk appetite also has a lower limit, that is, if the company is running too little risk. It can be as bad as taking too much risk because it means that the use of assets is not optimised and income is below capacity. Companies with very low risk levels are slow, innovative, and quickly become obsolete. Risk appetite is translated into standards and policies that maintain the level of risk within finite limits. Ideally, tolerance and risk appetite should be accepted by top management and communicated clearly to all stakeholders, and a process should be established to review and approve any exceptions. Risk tolerance is the acceptable variation that management is willing to allow for any particular risk. It means that, in addition to the normal risk appetite, in specific cases, the organisation can allow without reaching levels thattreating the company's risk capability. Acceptance of the ideal risk must occur within the risk tolerance range. In specific cases, monitoring or innovative initiatives may occur within the risk tolerance range, but never come close to or exceed the risk capability of the company. Risk-taking beyond the company's normal risk appetite should be evaluated and decided on by a specific committee so that our senior management is aware of the decisions they are making. The following is a graph that facilitates the understanding of these levels. In this chart we can see the greenbelt, which is the appetite for risk and where the great majority of risk must be. Any risk below that level indicates inefficient resource use and an organisational culture of fear. Above the green belt. Until we reach the orange line,we have risk tolerance. Specific cases of special projects or initiatives with broad support and monitoring by top management can be accepted within this range, but are high-risk projects. Risks that exceed the orange band are above target and already treating the continuity of the company. If some specific risk happens to exceed the risk capability, the very existence of the company will be in check. This is not a desirable situation, and risk professionals should avoid it by efficiently performing the risk management process. The primary goals of this section are to provide visibility to risk and allow management to make conscious decision decisions.

4. What is a company's "risk culture"?

Risk management is a key part of corporate governance. Asset governance and company mission are reflected in the ways in which the organisation seeks to protect its assets and achieve its objectives. And risk is a factor that can lead to asset failure or loss. Understanding risk includes understanding the organization's goals, objectives, values, and ethics. Senior management develops and communicates a certain level of willingness to embrace, accept, be cautious of, or avoid risks, whether consciously or unconsciously. This is called the organization's risk future. The best indicator of an organization's risk future is how it handles risk. The risk future reflects a balance between weighing the negative, positive, and regulatory elements of risk. Some symptoms of an inappropriate or problematic riskfuture are first, the misalignment between the risk appetite defined in the policy and reflected in the behavior, which is quite clear when the behaviour of the people, and in this case, many of the managers in the decisionmaking is quite different from that defined in the policy. For example, there may be a risk policy that establishes a risk-taking future, but in practice, inexperienced managers are mostly his covers. This may represent a second symptom of an inadequate risk future, that is the existence of a blame future. In this type of future, the focus is on the symptoms and the blame for the problems, not the root cause. Change for the future means changing the small things in the corporation's daily life, such as not being willing to discuss responsibility for a problem, but understanding its root cause. This is an example that must be given top-down, especially by senior management of governance. Thus, risk culture is defined as the set of shared values and beliefs that govern an attitude towards risktaking with care and integrity and determine how open risks and losses are reported and discussed. That is, it means how actions are carried out day by day when a project meets the deadline or does not meet expectations. How is this discussed? Are we going to understand why there was a failure in the project, such as in the requirements collection or in the validation process? Or are we going to discuss who is responsible for the field? Why are awareness campaigns ineffective for future change? The corporation's day-to-day exclusions are defined by the future. The three basic elements of risk future are the behaviour to take the risk, the behaviour to comply with existing and disclosed policies, and the behaviour to negative outcomes. All three of these basic elements are linked. Now, I'm going to show you an image that is in the Series Review manual, six edition, but that is from a document called ISACA's IT Risk Framework, which demonstrates well these three basic elements of risk in the future. As we shall see in the future, the three basic elements that we discussed are demonstrated. And for each basic element, the true approach normally adopted by the company in its behaviour towards taking risk,we see two possibilities Conservative means very conservative and aggressive, which means taking risks There are a multitude of nuances between these two possibilities and the profile of top management that will determine the company's position against risks. Companies in highly regulated markets, such as pharmaceuticals, may be risk averse when it comes to highly controlled car systems but aggressive when it comes to support systems. policy compliance at the behaviour stage The possibilities are compliance and not compliance.That is how the people within the organisation and the organisation itself in the external scenario behave in accordance with established policies and finally towards negative outcomes. The possibilities are learning from the past, which is when top management has to treat a negative result or accident. If it decides to learn from the mistake, we try to find the root cause and try to correct the process. That hinders risk-taking and, consequently, innovation.

5. How to carry out the correct communication of risks?

The method and how often risk communication play a key role in defining and understanding the organization's risk future. Communication is important because it removes uncertainty and doubts about risk management. If a risk must be managed and mitigated, it must first be discussed and effectively communicated to the various stakeholders and staff throughout the organisation in ways that are appropriate for their respective roles. The benefits of up and risk communication include: risk decisions are better informed by top management to improve understanding of current exposure and potential impact on the business; greater awareness among stakeholders of the importance of value and integration of risk management into their day-to-day tasks; and finally, greater transparency regarding the current level of risks threatening the company and the risk management process being used. Not all risk incidents need to be reported, but a lack of communication can be a sign that an organisation is not healthy or stable. In other words, great communication influences the success of the company's entire risk management program. For example, it may generate a false sense of confidence at all levels of the company and unintentional acceptance due to ignorance of risk that may exceed risk appetite. Or it can generate, for example, strategic planning, failure to provide adequate risk management efforts, or the perception that the organization is trying to hide risks from stakeholders. The three basic elements of risk communication are one, the expectations of risk management, two, and three. This means having a well-defined and published risk strategy, policies, procedures, training, and continual reimbursement of the organization’s principles regarding risks. The second element is the current capacity of risk management. This allows monitoring the state of the so-called risk management machine of the company. That is, the question here is, are we doing well in the risk management effort? This is a key indicator of good risk management. Each organisation will identify a way to measure risk management capacity. What are the risks being discussed for our projects, for our change, for demands at meetings? All of this has a predictive value for how well the company is managing risk and reducing exposure. three, and finally, the current state of its risk, including information such as the company's risk profile, key risk indicators, that is, to indicate risk keys and also the root cause of loss. Evidence and options for risk mitigation Reporting of incidents is an essential part of the risk management process. If managers are not open and transparent about operational problems and failures, decisions can be made based on inaccurate information. Risk professionals should seek to develop lines of communication and reporting so that information is available to management at the right time and equalize communication, even of negative activities, when appropriate. You.

6. What are the elements that make up a risk?

It is not enough to have a vulnerability to be considered a risk. The correct form of risk identification requires that all the elements that compose it be analysed and documented. First, the organisation must understand what its assets are. Its data center, database, market image formulas, and other corporate secrets, including keeping personal essentials for the company, can be considered assets. Then the consequences a given thread imposes on those assets should be analysed and documented. For this threat to be real, whatactor will do must be understood. So it is interesting to create scenarios for these narratives to help clarify the risk of our involvement. That is, this actor has the intention and ability to exploit a vulnerability specific to the threat. That is, this vulnerability is the attack vector. The actor we will use to exploit the risk documentation that clarifies these elements will be complete enough that stakeholders who have access to the risk documentation can make informed decisions about the risk involved. achieving the governor's mission of helping the company create value for its customers. It is very important to emphasise that identifying risks depends very much on the successful identification of assets, threats to thoseassets, and vulnerabilities that these assets have. The whole risk identification exercise and, consequently, the risk management itself begins with the correct identification of assets. If assets are not considered, it is unlikely that the team involved will encounterthreats and vulnerabilities to those assets. So, even if risk management is effective at this stage, it will have no tangible effect and will generate 1,000 of security for the company. It is therefore important that our business owners and the company itself are involved in risk education activities so that it is impossible to have a more complete risk view that considers the point of view of the whole company, reducing exponentially the possibility of assets, threats, orvulnerabilities that have not been mapped at any age, even involving the whole company. Some items are not identified for patients. This is the so-called learning future. We have reached the maximum possible in terms of risk identification. We use all the aggregate knowledge of the company, and what remains is to respond in the best way to the instant, generating lessons, learning, and addpoints for the development of corporate maturity. Maturity: the risk landscape is always changing and this process is alive. If there is a professional who does his homework well today and conducts this process in an employee manner, there is a risk that tomorrow there will be a new risk and if he does not continue to handle risk management on an ongoing basis, you will have your value creation affected by a negative event that compromises your delivery capability or other value-added assets.

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