risk mapping in risk management welcome
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thank you risk mapping in risk
management is discussed in this video
in this video we'll discuss how a risk
map can be used by an organization to
manage its risks in an
easy-to-understand
way now let us start
meaning of a risk risk is the
uncertainty of a financial loss
a risk exists where there is an
opportunity for a profit or a loss
in terms of losses we commonly refer to
the risks as exposures to loss
or simply exposures fire is an exposure
defective products or defamation are
liability exposures
the loss of business that results from a
damaged building or tarnished reputation
is also an exposure risks can come from
various sources including uncertainty in
international markets
threats from project failures at any
phase in design
development production or sustaining of
life cycles
legal liabilities credit risk accidents
natural causes and disasters deliberate
attack from an
adversary or events of uncertain or
unpredictable root cause
there are two types of events which are
one
negative events which can be classified
as risks or threats
and two positive events that may be
classified as opportunities
what is risk management risk management
is the process of identification
analysis and acceptance or mitigation of
uncertainty in investment decisions
organizations face many risks and they
must decide where to focus their
mitigation resources
to handle or manage risks organizations
usually have the options to avoid
control accept or transfer risk the
adverse effects of risk can be objective
or quantifiable like insurance premiums
and claims costs
or subjective and difficult to quantify
such as damage to reputation or
decreased productivity
by focusing attention on risk and
committing the necessary resources to
control and mitigate risk
a business will protect itself from
uncertainty
reduce costs and increase the likelihood
of business continuity and success
meanwhile a risk map can be used as a
tool to improve the risk management
system of an organization
what is a risk map a risk map also known
as a risk heat map
is a data visualization tool for
communicating specific risks and
organization faces
a risk map is a graphical depiction of a
select number of accompanies risks
designed to illustrate the impact or
significance of risks on one axis and
the likelihood or frequency on the other
risk mapping is used to assist in
identifying
prioritizing and quantifying at a macro
level
risks to an organization this
representation often takes the form of a
two-dimensional grid with frequency
or likelihood of occurrence on one axis
and severity
or degree of financial impact on the
other axes
the risks that fall in the high
frequency high severity quadrant are
given priority risk management
attention a risk map helps companies
identify and prioritize the risks
associated with their business
the goal of a risk map is to improve an
organization's understanding of its risk
profile and appetite
clarify thinking on the nature and
impact of risks
and improve the organization's risk
assessment model
in the enterprise a risk map is often
presented as a two-dimensional matrix
for example the likelihood the risk will
occur may be plotted on the x-axis
while the impact of the same risk is
plotted on the y-axis
a risk map is considered a critical
component of enterprise risk management
because it helps identify risks that
need more attention
identified risks that fall in the high
frequency and high severity section can
then be made a priority by organizations
if the organization is disbursed
geographically and certain risks are
associated with certain geographical
areas
risks might be illustrated with a heat
map using color to illustrate the levels
of risk to which individual branch
offices are exposed
why it's important to create a risk map
a risk map offers a visualized
comprehensive view of the likelihood and
impact of an organization's risks
this helps the organization improve risk
management and risk governance by
prioritizing risk management efforts
this risk prioritization enables them to
focus time and money on the most
potentially damaging risks identified in
a heat map
chart a risk map also facilitates
inter-departmental dialogues about an
organization's inherent risks and
promotes communication about
risks throughout the organization it
helps organizations visualize risks in
relation to each other
and it guides the development of a
control assessment of how to deal with
the risks and the consequence of those
risks
benefits of using risk heat maps
risk heat maps can offer significant
benefits to organizations
here are some of the benefits of using
risk heat maps by an organization
visual big picture holistic view that
can be shared to make strategic
decisions
improved management of risks and
governance of the risk management
process
increased focus on risk appetite and the
risk tolerance of the company
more precision in the risk assessment
and mitigation process
and greater integration of risk
management actions across the enterprise
the importance of risk mapping business
organizations
why should your organization be using
risk maps
building a risk map brings valuable
benefits
you will have a thorough understanding
of your risk environment
and how individual risks compare to one
another
you can use this to strategically
prioritize your risks and determine
where to use your limited resources
the map can help the company vesu police
how risks in one part of the
organization can affect operations of
another business unit within the
organization
a risk map also adds precision to an
organization's risk assessment strategy
and
identifies gaps in an organization's
risk management processes
a risk map is built by plotting the
frequency of a risk on the y-axis of the
chart and the severity on the x-axis
frequency is how likely the risk is or
how often you think it will occur
severity is how much of an impact it
would have if it did occur
the higher risk ranks for these
qualities the more threatening it is to
your organization
the most severe and frequent risks your
primary risks
are critical and would hinder your
ability to conduct business
risks that are severe but unlikely that
is your detect and monitor risks
are those risks that should be watched
but don't require heavy mitigation
strategies
risks that are highly likely but
insignificant your monitor risks
will not impact your ability to continue
operations
finally the risks that are low in both
frequency and severity
your low control risks can be revisited
on a yearly basis to ensure
the risk remains low risk maps are a
valuable tool as they assist
organizations too
1. understand the risk environment
risk management begins with building a
list of all risks your organization
faces depending on your industry this
number could range from a handful to
hundreds
risk mapping is beneficial because it
requires you to assess
each risk and its causes and
consequences individually
it also allows you to look at your risk
environment as a whole and understand
how frequencies and severities compare
finally a risk map is a visual that
anyone in your organization can use to
see the big picture of risk's most
prominent
in your industry or workplace 2.
prioritize mitigation strategies
with limited resources it's important to
be strategic about mitigation techniques
risk mapping allows you to determine
what steps to take first
implement prevention tactics for the
most frequent and severe risks before
moving on to others
this prioritization method ensures that
you address the risks that have the most
potential to cause harm to your
organization
three allocate limited resources
whether your organization consists of
two employees or two thousand
risk managers have limited resources
risk mapping allows you to use them to
prevent primary risks
d m risks should be revisited several
times a year to ensure appropriate
management
similarly monitor risks typically only
need to be checked yearly to ensure
their potential impact hasn't grown
finally by figuring out which risks are
low control
you will know where not to spend time
and money
however keep in mind that no risk can be
completely ignored
make sure you still consider these in
future assessments and ensure that the
low risk status has not changed
4. receive better insurance premiums
risk maps can also help your
organization in becoming an
international standard
organization iso certified
as it shows that you have an
understanding of your risk environment
and a strategic plan for moving forward
this can also help you receive
competitive insurance premiums
insurers are looking for good risk or
companies they believe will have minimal
losses
key considerations for risk heat maps
to develop an effective cyber security
risk heat map
consider these critical elements
what are your most critical systems and
information assets
those you want to map how accurate is
the data and where is it coming from
what is your organization's appetite for
risk
what categories and levels of impact
would be considered material
for example monetary brand reputation
and other related impacts
what is the range of acceptable variance
from your key performance and operating
metrics
and how will you define terms to
integrate potential risk events with
your heat map
how to build a risk map a risk map is
built by plotting the frequency of a
risk on the y-axis of the chart and the
severity on the x-axis
frequency is how likely the risk is or
how often you think it will occur
severity is how much of an impact it
would have if it did happen
the higher risk ranks for these
qualities the more threatening it is to
your organization
let us discuss tips on how to build a
risk map
here are four tips on how to build a
risk map
one involve people from all parts of
your organization
risk mapping is not a process that
should be conducted by one person
every person in your business from the
ceo to the intern
will have different ideas about what
risks are most prevalent to your
industry you cannot involve everyone but
ask multiple people from various
departments and levels of authority to
ensure you are getting unique viewpoints
this will also allow you to discover
risks that you may not have previously
considered and gain new perspectives on
how frequent or severe a risk really is
2. understand each risk
simply naming your risks does not allow
you to build an effective risk map
you must assess each scenario with a
strong understanding of the business and
how the risks can impact your ability to
continue operations
think about what is likely to cause the
risk and the consequences it will have
if it occurs
it is also important to be consistent in
how you rank each risk in terms of
frequency and severity so that the final
product is a clear depiction of how the
risks compare to each other
3. seek guidance if consulting those
within your organization isn't providing
a sufficient understanding
look elsewhere you can try to determine
how likely and impactful a risk will be
based on your experience and past losses
but what if you're a startup company you
can ask an expert
many insurance providers are able to
assist with risk management tools
and if not they can like why suggest
someone who can
you can also look at similar
organizations and industry statistics to
help guide your risk ranking
4. revisit and modify
you've built your risk map and are now
using it to help manage and mitigate
great but it's important to remember
that your risk landscape is constantly
changing
revisit your rankings with the risk
management team at least
quarterly to discuss if the status of
any existing risks has changed or if any
new risks should be placed on the map
doing so will ensure that your risk map
is a consistently helpful tool that will
help you reduce
incidents and costs major ways to use
risk heat maps by organizations
where charts have to be interpreted and
tables have to be understood
heat maps are self-explanatory and
intuitive
because they are tailor-made for putting
massive data sets into a context that's
easy to understand
they are increasingly valued as a
superior data visualization tool in
cyber security for identifying
prioritizing and mitigating risks
here are three major ways to use risk
heat maps by
organizations 1. risk impact heat map to
show the likelihood of a risk event
happening
versus business impact of such that
event
risk is the product of breach likelihood
and breach impact
in this type of heat map the horizontal
axis shows the likelihood of a cyber
security breach
the vertical axis shows the business
impact of a breach
the colors are as scary as for example
green colored boxes indicate no
action needed and red boxes indicating
immediate action needed
the individual risk items are then
plotted on the heat map based upon the
business impact and likelihood of breach
happening
this can be computed as follows risk is
equal to impact multiplied by likelihood
2. comparing breach likelihood across
different business
areas risk heat maps can be used by an
organization to comparing breach
likelihood across different business
areas
here is an example of a heat map that it
can use to compare breach likelihood
across different
areas or groups such charts can be
created for multiple types of risk
groups
asset types locations business units
and more 3. mapping information
technology
i t asset inventory by type and risk
associated with each of those categories
risk heat maps can be used by an
organization for mapping i.t
asset inventory based on the type of it
asset inventory and risk associated with
each of those categories
here is an example of a heat map that it
can use to map i.t
asset inventory by type and risk
associated with each of those categories
how to create or build a risk map for
the heat map to be insightful and
comprehensive
it should be created using accurate and
complete information
identification of inherent risks is the
first step in creating a risk map
risks can be broadly categorized into
strategic risk
compliance risk operational risk
financial risk and reputational risk
but organizations should aim to chart
their own lists by taking into
consideration specific factors that
might affect them financially
once the risks have been identified it
is necessary to understand what kind of
internal or external events are driving
the risks
the next step in risk mapping is
evaluating the risks estimating the
frequency
the potential impact and possible
control processes to offset the risks
the risks should then be prioritized the
most impactful risks can be managed by
applying control processes to help
lessen their potential occurrence
as threats evolve and vulnerabilities
change a risk map must be re-evaluated
periodically
organizations also must review their
risk maps regularly to ensure key risks
are being managed
effectively for example let us briefly
consider how a firm can build a cyber
risk heat map
cyber security heat maps involve an
extensive and disciplined assessment
process at the back end
in order to present a simple
visualization of risks and recommended
actions at the front end
the heat map is an essential and useful
output of your overall cyber security
assessment and vulnerability management
process with a rapidly increasing attack
surface
the first step is to accurately measure
a cyber risk attack surface
this means getting complete visibility
into all your i.t
assets devices apps and users
and then continuously monitoring them
across all 200 plus attack vectors in
adversaries arsenals
the company therefore need to regularly
analyze the observations to derive risk
insights
this is a layered calculation that
involves incorporating information about
threats vulnerabilities mitigating
actions
business criticality impact elasticity
and time to repair conclusion
risk mapping in risk management has been
discussed in this video
a risk map or risk heat map is a
graphical representation of cyber risk
data where the individual values
contained in a matrix are represented as
colors that connote meaning
risk heat maps are used to present cyber
risk assessment results in an
easy-to-understand
visually attractive and concise format
risk maps can be used by an organization
to improve its risk management culture
risk maps can therefore assist to
enhance understanding and prioritization
of a firm's risk management system
in short heat maps present a very
complex set of facts in an easily
digestible way
this helps organizations to enhance
their resilience
in the highly challenging business
environment
hope the video is educative and
beneficial to you
which aspect of the risk mapping in risk
management discussed in this video do
you consider to be more relevant in your
organization
please post your answer to this question
in the comment section below
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