What is integrated risk management?
Integrated risk management (IRM) is commonly used to describe auditing and compliance solutions and processes that comprehensively view organizational risk in one centralized location. In IRM, the three lines of defense (3LOD), risk managers, oversight/compliance and assurance work together to eliminate redundancies and provide a more profound analysis of risks throughout the organization.
While solutions that might once be referred to as governance, risk and compliance (GRC) tools are now being called IRM solutions, that doesn’t mean the two are competing acronyms: IRM is the unifying approach to modern GRC.
What is modern GRC?
GRC stands for governance, risk and compliance and is a system organizations use to structure governance, risk management and regulatory compliance.
What is modern IRM?
IRM is a set of processes and practices enabled by technologies and a risk-aware culture that improves data-driven decision-making around risk within an organization. According to Gartner, IRM has six key attributes:
• Strategy
• Assessment
• Response
• Communication and reporting
• Monitoring
• Technology
IRM represents a lens through which your organization can view all of its risk-related activities, including but not limited to legal, supply chain, third-party, cybersecurity, financial and other forms of risk. That enables you to take a proactive risk management strategy rather than waiting to respond until a new risk becomes apparent.
Traditional risk management
Organizations with traditional risk management practices need more communication between teams and departments. This can lead to a lack of visibility into organizational risk and make it challenging to plan clear strategies for growth when various risk scenarios are not considered.
In such organizations, ongoing enterprise projects typically take precedence over strategic thinking. Work dedicated to operational support takes priority over process improvement. And projects are seen as priorities over implementation work.
In theory, enterprise, operational and project work should inform one another, but often, it tends to be highly siloed. This results in a disjointed environment where essential data may be overlooked or errors may not be caught in time. Such an environment causes companies to take a reactive approach to risk and assess risks individually rather than grouping them to analyze organization-wide trends.
Traditional GRC: Compliance first
It follows that a traditional risk management organization will use standard GRC tools.
Such GRC solutions may focus heavily on compliance initiatives, with custom workflows for regulatory requirements, such as SOX or GDPR. They provide support with corporate governance to ensure that you’re checking the right boxes and following the proper protocols in your compliance initiatives.
However, these solutions may be used by the compliance team only rather than the entire 3LOD. They are not fully integrated with other risk mitigation and risk management needs, so they lack visibility into new and emerging threats and opportunities for business growth. Teams aren’t sharing data in direct communication with one another, making a comprehensive risk analysis process challenging.
IRM: Risk first
In contrast, IRM is a form of GRC that focuses on a risk-first, rather than compliance-first, outlook.
In IRM, enterprise, operational and project risks are integrated and prioritized. Each risk is assessed with a mitigation plan, a risk owner, and a set of KRIs to help your organization understand the necessary mitigation steps. Implementing IRM is the only way to ensure that competing priorities, obligations and reporting needs are met.
IRM leverages technology to identify, monitor and mitigate risks using a comprehensive, organization-wide lens. It empowers leaders to take a proactive approach to managing risks and making informed decisions.
It also enables companies to drive a risk-aware culture, enabling boards and employees to understand ways to mitigate risks at their level.
Integrating your organizational risk
To put IRM into practice, you must build a comprehensive framework that unifies and aligns your 3LOD and empowers them to collaborate transparently in a best-in-class IRM solution.
Your technology solution should offer pre-built processes and controls that enable your organization to automate compliance initiatives seamlessly and a transparent dashboard that makes it easy to share data and manage the status of strategic initiatives throughout the organization. By automating repetitive tasks and providing access to comprehensive, real-time streaming data analytics, your organization can help your risk management teams work to their full potential. They’ll be able to visualize data that helps them identify and mitigate against new risks in real-time and identify organizational risk trends.
With IRM, your risk management teams can identify areas of significant cost savings, uncover hidden risks, and unlock strategic insights that enable them to drive the business forward. By taking a comprehensive view of your organizational risk and using technology that helps you respond with agility, you can transform your risk management team into a vital strategic partner to the business.