Risk response is a part of daily life – every time drivers get in a car, they actively implement strategies to respond to driving-related risks through wearing a seatbelt, being a defensive driver, and having a car with enhanced safety features. However, everyone is willing to take on a different level of risk, which makes matters complicated. Risk managers deal with multiple levels of complexity in a constantly changing threat landscape. Therefore, having an optimized risk response process is essential for helping enterprises manage risk efficiently.
There are five common responses to negative risk: avoid, share/transfer, mitigate, accept and increase. Each response has potential benefits and common pitfalls. Rather than choosing just one response option, risk managers often employ a combination of options. Enterprises must carefully ensure the following when weighing risk response options:
- The strategy to respond to risk supports the enterprise’s goals, objectives and IT strategic alignment.
- The strategy to respond to risk does not contradict the enterprise’s value proposition.
- The strategy to respond to risk is aligned with the enterprise’s risk appetite and tolerance.
- The enterprise has the ability, risk maturity, and the appropriate people, processes and technology to execute the chosen risk response option.
- The enterprise has considered how each risk response option influences the components of risk (loss frequency, loss magnitude and risk velocity).
To offer more insight into this topic, ISACA® has released the white paper, Optimizing Risk Response. This white paper confronts the inconsistencies, opportunities, obstacles, strengths and weaknesses inherent in risk response options to provide readers with an understanding of how to manage risk in a way that aligns with enterprise goals and culture. Optimizing Risk Response was written with enterprise decision-makers and risk managers in mind.
To read ISACA’s Optimizing Risk Response, download the white paper from the ISACA bookstore.