MODULE – B: FRAUD MANAGEMENT | INCIDENT OF CYBER-CRIMES
INTRODUCTION TO RISK MANAGEMENT
The method of risk assessment is one that analyzes and eliminates the risks with the intent to mitigate threats along with optimizing the investment profits. This process of risk management includes detecting, reviewing, and reacting to the factors of risks associated with a company’s existence.
Efficient risk management seeks to proactively monitor the potential performance of the risk factors. This way, it is both the potential of risk actually occurring and its possible effects. Risk is managed by implementing a system to track, control, and reduce the possible effect of unseen and unfavorable events.
There are so many different sources from which risk could occur such as failure of a project, financial danger, market volatility, natural disasters, legal repercussions, etc.
LAYERS OF RISK MANAGEMENT IN AN ENTERPRISE
Companies have to face many risks and employ strategies and have to have employee participation at different levels to handle these risks. Company risks can be classified into the below-mentioned layers:
Enterprise Risk Management: Enterprise risk includes reputational risks, strategic risks, legal risks, IT and organizational risks, etc that an enterprise has to face as a whole.
Organizational Risk Management: These risks relate to the processes and Technology employed inside the structure of the organization.
IT Risk Management: This is a subcategory of operating and Enterprise risks that cover threats related to Information Technology and Systems.
Cybersecurity Risk Management: It is one of the domains of information technology risk whose main focus is on the technology, activities, and procedures which are designed to protect an enterprise’s network infrastructure, programs, and data from unauthorized access.
IMPORTANCE OF RISK MANAGEMENT
Assessment of any risk is important because it enables the organization to please appropriate systems to tackle future risks. Having an appropriate instrument used to detect and deal with future threats is one of the best methods to identify the risk. It further helps the management to make rational decisions.
PLAN FOR EVENTUALITIES
Having an established plan to deal with future eventualities helps in assessing and handling the risks. While reviewing one has to consider what could come in the way of business success. So, when an organization assesses its strategy for future challenges and puts in place systems to deal with unknown events, it increases the chances of profits.
Having a progressive risk management system makes sure that the higher priority risks are handled aggressively. It also helps in making informed decisions and ensures that there are profits in the business.
MITIGATION OF THREATS
Cyber risk management also forms part of risk management. The main purpose for which risk management is done is to evaluate and reduce the level of impact that the unknown events could have on the business in this fast-changing world.
PROTECTS THE IT ASSETS
Risk management is a process of identification, evaluation, and giving ratings to different risks as per their severity from high to low. Cyber waste management is more than just a compliance solution because it protects the Assets of the company and maintains stability against unfortunate events.
Below are given some of the reasons why having a risk management plan is important for any organization:
- Identification and management of blind spots.
- Planning risk assessment.
- Identification of threats that could emerge and please preventive measures to reduce the future damage.
- Identification, management, and handling of Cyber threats.
- Creation and implementation of a robust response system.
- Streamlining the IT systems
- Ensuring that the data remains safe and there is regulatory compliance.
RISK MANAGEMENT PROCESS
Having a 360 degree secured ecosystem requires the following risk management processes in the organization:
Risk identification: Identifying the vulnerabilities is the first step towards risk management and it requires brainstorming. The next thing to do in this step is to prioritize all the rats that have been identified. Because all threats cannot be mitigated or reduced, prioritizing helps in handling the risk which can have a great impact on the organization on a priority basis.
Risk assessment: Like any problem-solving technique, risk management also requires asking the question of how risk could arise and then trying to find out how it can affect the business and then finding what would be the best way to manage it.
Response formulation: When an organization decides to set itself to face a challenge by improving risk management, then while reviewing the possible solutions to different identified risks as well as to eliminate them altogether, it also needs to find what could be the solution to stop the risk from reoccurring and if it does reoccur, what would be the way out.
Preventive measures against identified risks: Using preventive measures against risks that have been identified is the last step in risk management. Under the step, the concepts which are considered helpful in reducing the risk are integrated into different activities of the organization and then into contingency measures to be applied in the future.
HOW RISKS ARE DEALT WITH
After identification of risks that apply to the business, it is time to find out what could be the approaches to reduce or to cope with the risks. There are different ways to handle risks and some of them are mentioned below:
Risk avoidance: The safest way to mitigate risk is to avoid it. For example, an investor has a risk that his or her investment value might decrease. This situation can be eliminated by not engaging in the deal, thus, eliminating the risk entirely.
Risk reduction: One cannot avoid all the risks but surely some of them can be reduced to some extent. Reduction involves taking correct steps when one invests in insecurities or anything else. One can use derivatives to mitigate risk.
Risk sharing: It is important to note that there could be a situation when risk can neither be minimized nor it could be eliminated altogether. In those cases, it is a reasonable decision to share the risk in one way or another. The risk can be shared with a third party where they can divide the liability on a fair basis considering the reasonable facts.
Risk retainment: There are certain risks that one has to take even after avoiding or reducing or sharing the other risks. When there is a potential project, one has to see the upside potential of the project. Institute of saying the downside risk that is involved in the project.
Today we can find new and modernized information technology Strategies and methods which also include risk assessment systems that try to optimize risk management so as to improve the job practices which are involved in the process of risk management.