What is a risk management plan?
A risk management plan is a written document that details the organization’s risk management process. This process starts by creating a team of stakeholder across the organization to review potential risks to the organization. This stakeholder team should include senior management, the compliance officer, and any department managers. If the organization is developing software, then one project manager from each project team should also be included to review project management and respond to project risks.
Once created, the team can begin working on the risk management process.
First, the team members need to review business objectives, such as product development or third-party business partnerships. By starting with business objectives, the risk management process aligns to current as well as future goals.
The second step in creating a risk management plan lies in reviewing digital assets such as systems, networks, software, devices, vendors, and data. Cataloging these assets then allows the team members to identify risks to the assets. A risk, or uncertain event, can be a positive or negative condition that has a financial, operational, or reputational impact.
After identifying risks, the risk management team needs to assess the risk. Positive risks, such as early product delivery, can also lead to negative risks, such as a customer’s inability to meet a payment schedule. The organization needs to foresee risks in order to find a way to analyze their potential impact.
For each risk identified and assessed, the team must look at the likelihood the event will occur and then estimate impacts to the business if it does occur. Multiplying likelihood by the estimated impact can give insight into a risk’s effect. A risk with a low likelihood leads to a devastating financial impact. Meanwhile, a risk with a high likelihood may have no impact. Part of the quantitative or qualitative analysis is creating the risk assessment matrix. This allows the risk management team to use the risk analysis and assign ratings such as high, medium, or low.
After assigning risk ratings, the team works to determine whether it will accept, transfer, mitigate, or refuse a risk. The team may decide to accept a low risk, a potential event that is not likely to occur and would have little impact if it did occur. However, it may also should to refuse a high risk, a potential event that is highly likely to occur and would have a large impact.
For accepted risks, the team must create a set of risk mitigation strategies. For every risk that an organization accepts or transfers, it needs to defines responses to issues that can occur. In information security, this means setting controls to protect data from cybercriminals. Thus, the risk mitigation strategies act as a contingency plan in case the event occurs to help limit the defined impact.
Risk management plan
The risk management plan is a document that contains all the risk assessment, analysis, tolerance, and mitigation considerations.