Risk Mapping and Risk Mapping in Risk Management (Risk, Risk Heat Map, and Risk Management)

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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