Risk management is a challenge for most businesses, but security breaches aren't their top concern. Most fear long-term reputational damage will stem from their inability to manage risk.
This comes from a new survey entitled "The Imperative to Raise Enterprise Risk Intelligence," sponsored by RiskVision and conducted by the Ponemon Institute. Researchers surveyed 641 individuals involved in their organization's risk management programs to learn about the state of business risk intelligence.
They discovered the biggest fear resulting from a poor risk management program is reputation damage (63%). Security breaches and business disruption tied for second; each was cited by 51% of respondents.
"It was a surprise," says Joe Fantuzzi, president and CEO of RiskVision. "Despite all the noise and issues around cybersecurity, organizations really fear brand damage. That can come from cybersecurity breaches, but it can also come from lost intellectual property, accidents like losing laptops, and bad market news."
Boards of directors have had risk committees, he continues, but historically they have focused on dangers related to financial risk, market risk, currency exchange risk, and credit risk. IT and cyber risk are still new to them.
"There is an increasing awareness that they need to understand [cyberrisk]," Fantuzzi says of business leaders. "But ultimately as a board member, you're looking at the stock market and shareholder value, and that value is directly impacted by reputation. I think that's how they see it."
As cyberattacks on businesses become more publicized, enterprise leaders face the responsibility of predicting the likelihood, and potential impact, of security breaches. Many are scrambling to determine the best approach to risk modeling.
The survey discovered less than one-quarter (24%) of respondents say their organization has a clearly defined risk management strategy that is relevant across the enterprise. One-third do not have a clearly defined strategy at all. Only 37% said their risk management process was "very effective."
There are several barriers organizations face as they create and implement risk management plans. More than half (53%) of respondents, for example, say there is a lack of collaboration among the finance, operations, compliance, legal, and IT teams on risk management projects.
Budget problems prove another obstacle, the study found. More than half (52%) of respondents don't have a formal budget around enterprise risk strategy. Other key barriers to achieving risk management goals include lack of resources (44%), complexity (44%) and inability to get started (43%).
It's worth noting some progress has been made. Eighteen months before the study, only 21% of businesses reported they measured risk in real time with automated business unit decision-making, board-level analytics, and metrics. Today, that number has reached 32%.
Further, among the businesses with formal budgets dedicated to risk management, 58% plan to spend between $1M and $5M on risk management products in the upcoming fiscal year, the study found.
For organizations working to reduce their IT security risk, Fantuzzi recommends starting with an asset inventory.
"Many people don't have a good inventory of their assets," he notes. "And it's not about determining how many apps or network servers you have. You need to know who owns them and what their criticality is; what's going through them and what's stored on them."
Criticality management is important, he continues, because some data is higher risk than others. Look at assets and the threats that can attack them, run regular vulnerability scans, and keep a prioritized list of what matters.
Business leaders who take these steps will have a well-documented list in the event of an incident.
"If an incident happens, you'll be able to show the board and regulators you've done everything possible," Fantuzzi explains. "The impact on your division will be small because, as you know, bad things happen."