How would you go about creating an information risk profile for a small start-up business? Describe what the risk profile for the business would contain? How should the business use the risk profile?
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An information risk profile is developed collaboratively by numerous stakeholders, including business leaders, data and process owners, enterprise risk management, internal and external audit, legal, compliance, privacy, and IRMS. With that in mind, when creating an information risk profile for a small start-up business, I would invite business stakeholders, including business leaders, data process owners to a meeting to discuss the potential and identified risks, and document them. I think it would be a good idea to build a framework around risk levels and categories. Based on the framework and the likelihood of the threats occurring, the organization can write a summary on the type, quantity, and priority of the information risks that the organization faces along with an evaluation of overall risk management maturity. Within the risk profile, it should clearly state the strategy options for accepting, mitigating, transferring, or financing for risk. The business should then use this risk profile (alongside a target risk profile) to decide where to allocate resources to improve their information risk management practices.
A good representation of an entity’s risk profile will support senior officials to understand whether the entity is holding too much, too little, or just enough risk. Where an entity has a well defined risk appetite, this can be represented within the risk profile. The risk profile can be used to clearly highlight where activities, programs or business units are operating outside defined risk tolerance thresholds.
• Risk profile should be used to capture and document all the risks that an organization is exposed to — both those inside the organization and those from outside.
• This profile is developed collaboratively with numerous stakeholders throughout the organization, including business leaders, data and process owners, enterprise risk management, internal and external audit, legal, compliance, privacy, and IRMS
• Depending upon the Risk Profile of the business, businesses can use the Profile to figure out the risks and decide which ones are acceptable vs the unacceptable ones.
• Some of those external risks can be hard to quantify, but that doesn’t mean that they don’t exist, and the fact that they are hard to quantify is itself a risk.
• Even the exercise of documenting all those risks helps the organization to see just what kind of exposure they are dealing with — something many organizations rarely consider in its entirety.
• All the identified risks should have an owner, and while my example has job titles, in a real document there should be the names of individual owners to remove any possible confusion.
• The risk profile should also document the amount of money and the amount of effort that is being invested in attempts to manage the risks.
• Reviewing the risk profile can then determine what steps to take proactively to secure the systems and its reputation especially for small businesses so that they can focus their efforts.
Hi Shubham,
I agree with your logic on what a risk profile for a business should potentially contain and how a business should use the profile. I think it is also important to consider the challenges for a start-up business that typically has limited IT, people, and financial resources. They are typically more prone to risk because they are financially unstable and a breach should lead to irreparable damage making them close down their business. It is because of this restrictive environment that it is important for start-ups to maintain an updated risk profile. Being a start-up does have its advantages though because of the small nature of the company; it is easier to access and accurately identify risks, and establish controls, and response time is quicker compared to bigger enterprises.
Hi Shubham,
Good Points! You mentioned recording all risks, and identified risk should have an owner. I agree with you. Start-up small businesses usually focus on organizational development and ignore the record of risks. In fact, recording all identified risks is more conducive to allowing organizations to focus on protecting information systems, reputation, and saving costs. When companies encounter the same risk again, they can control costs and risks more quickly.
For start-up small businesses, the first thing that should be done is to understand the business of the business, learn successful business cases, and analyze the reasons for failed businesses to avoid or reduce risks. Different companies have different industry standards, and appropriate acceptable information risk levels are formulated according to the company’s own situation. The information risk profile should include a summary of the organization’s data classification model and related control requirements and objectives. Business impact considerations identify the impact of an event or loss in a way that is easy for the organization to understand and recognize. These considerations should cover multiple categories, including finance, productivity, availability, reputation, compliance, partners and supply chain, and customers. The identification of known key information risks and mitigation capabilities provides a high-level perspective on the organization’s current information risk situation. These will change and evolve over time and should be re-examined as part of the annual update cycle of the information risk profile. In order for the information risk profile to be meaningful to the organization, its leadership and stakeholders must agree and recognize it. It is important to determine in the file who approves the profile and when to publish the profile. This can be done through the document change management control table. The information risk profile itself should be reviewed at least annually or as business conditions change potentially affecting the organization’s information risk appetite.
Reference:
Key elements of an information risk profile. ISACA. (n.d.). https://www.isaca.org/resources/isaca-journal/past-issues/2013/key-elements-of-an-information-risk-profile.
The the risk profile creation for a small business would include identifying the key importantant elements as follows:
Key risk areas (e.g., strategic, operational, project), including major
opportunities and threats
Categorization of risks (e.g., human health, environment, trade, legal, human
resources). Description of the risks
Probability of risk (low, med, high)
Impact of risk
Risk timeframe (e.g., short: 2 years or less, medium: 3-4 years, long term: 5
years or more), Relative priority of the risks
Ways of measuring the risk (qualitative and quantitative)
Risk tolerance levels (to the extent that these can be identified and/or
measured)
Mitigation measures that are currently in place, including strengths and
weaknesses of the department Linkages between different levels of risks (e.g., operational and overall departmental priorities, business and program risks, sector specific and
department-wide),
Linkages with management processes of the organization
Capacity of the organization to do risk management
Learning needs and tools