Operational vs. Strategic Risk Management

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Questions and Answers

What is risk according to ISACA's definition?

The probability of something happening

The likelihood of an event only

The impact of an event only

The combination of the likelihood of an event and its impact (correct)

Why is a common risk vocabulary important for risk-related professionals?

To allow a consistent approach to address and openly communicate about risk within an enterprise (correct)

To complicate the understanding of risk terminology

To hinder the identification and management of risk

To confuse communication about risk within an enterprise

Where are new risk terms introduced and defined in the study guide?

In the 'Terminology' section at the end of each chapter (correct)

In the 'Common Risk Terms' section at the beginning of each chapter

In the mid-section of each chapter

In the 'Glossary' section at the end of each chapter

What does likelihood describe in relation to risk events?

The potential of a risk event Signup and view all the answers

What is risk defined as?

The probability of a situation with uncertain frequency and magnitude of loss (or gain) Signup and view all the answers

What is a vulnerability in the context of enterprise risk?

A weakness in a process that could expose the system to adverse threats Signup and view all the answers

Which type of risk is associated with future business plans and strategies?

Strategic risk Signup and view all the answers

What does compliance risk involve?

The potential and consequences of failing to comply with laws, regulations, or ethical standards Signup and view all the answers

At what levels can risk exist within an enterprise?

Strategic, program, project, and operational Signup and view all the answers

What is the purpose of a procedure as described in the text?

To increase the probability of operations adhering to good practice and detecting abnormal operations Signup and view all the answers

What is the consequence of lack of adherence to standards and procedures?

Inconsistent and unreliable operations, elevating risk Signup and view all the answers

Which type of controls rely on technology, devices, or equipment?

Technical controls Signup and view all the answers

What is the emphasis of the Operational Level with regards to risk management?

Short-term goals for business services continuity Signup and view all the answers

Which type of I&T-related Risk involves alterations in technology, regulations, business processes, functionality, architecture, and other variables?

Change Risk Signup and view all the answers

What is essential for the effective operation of managerial controls?

Proper training and oversight Signup and view all the answers

What might lead to unidentified vulnerabilities, inefficient resource utilization, and greater-than-anticipated risk?

Failure to align technical, managerial, and physical controls Signup and view all the answers

Which authoritative risk management reference is specifically mentioned as a source for handling I&T-related risk?

ISO 27005 Signup and view all the answers

What does the I&T Risk Framework aid in understanding and managing?

I&T-related risks comprehensively Signup and view all the answers

What do compensating controls aim to reduce?

The risk of existing or potential control weaknesses Signup and view all the answers

Which type of I&T-related Risk involves unauthorized access or use of technology, electronic data, and digital communications?

Cyber and Information Security Risk Signup and view all the answers

What do I&T controls ensure within a well-designed information system?

The integrity and security of information assets handled within the enterprise or its outsourced operation Signup and view all the answers

What is the subset of overall business risk associated with use, ownership, operation, influence, and adoption of I&T within an enterprise?

I&T-related Risk Signup and view all the answers

How are I&T control procedures classified?

Input, Processing, Output, and Application controls Signup and view all the answers

Which type of controls cover sensitive or critical functions within an information system?

I&T controls Signup and view all the answers

What type of I&T-related Risk significantly impacts business by missing opportunities if inadequate I&T-related capabilities are in place?

I&T Benefit/Value Enablement Risk Signup and view all the answers

What does the I&T-related Risk Type 'I&T Program and Project Delivery Risk' affect?

I&T contribution to new or improved business solutions Signup and view all the answers

What is crucial for enterprises in maintaining a balance between control types?

Maintaining oversight, reporting, procedures, operations, technology-based provisions, and physical restrictions Signup and view all the answers

What are examples of technical controls as mentioned in the text?

Firewalls, intrusion detection systems, passwords, and antivirus software. Signup and view all the answers

What is the emphasis of the I&T Operations and Service Delivery Risk?

Impacts the performance of IT systems and services Signup and view all the answers

What is further discussed in Section 5.4 Risk States as mentioned in the text?

Control risk Signup and view all the answers

What is the primary focus of the ISACA Risk IT Framework, 2nd Edition?

Minimizing IT risks to acceptable levels Signup and view all the answers

What is a key aspect of the risk management process according to the ISACA Risk IT Framework, 2nd Edition?

Promotion of risk awareness, accountability, and responsibility throughout the enterprise Signup and view all the answers

Which function is crucial in the risk management process according to the ISACA Risk IT Framework, 2nd Edition?

Business continuity Signup and view all the answers

What is the purpose of audits according to the ISACA Risk IT Framework, 2nd Edition?

To ensure adherence to standards or guidelines Signup and view all the answers

Which personnel conduct audits according to the ISACA Risk IT Framework, 2nd Edition?

Objective, skilled, and independent personnel Signup and view all the answers

What do policies, standards, and procedures do according to the ISACA Risk IT Framework, 2nd Edition?

Guide decision-making and empower risk management Signup and view all the answers

What is the role of standards according to the ISACA Risk IT Framework, 2nd Edition?

Mandate compliance requirements and provide authority and perceived excellence Signup and view all the answers

What is the purpose of proper adherence to standards according to the ISACA Risk IT Framework, 2nd Edition?

Ensures better support and maintenance, cost control, and authority for enterprise practices and procedures Signup and view all the answers

What is the function of the third line in IT risk management according to the ISACA Risk IT Framework, 2nd Edition?

Offer independent testing and assurance Signup and view all the answers

What serves as a response to risk according to the ISACA Risk IT Framework, 2nd Edition?

Controls, consisting of processes, policies, procedures, practices, infrastructure, applications, and organizational structures Signup and view all the answers

What is the significance of collaboration between incident management and business continuity teams according to the ISACA Risk IT Framework, 2nd Edition?

Vital for identifying potential threats and establishing recovery mechanisms Signup and view all the answers

What does effective risk management shape according to the ISACA Risk IT Framework, 2nd Edition?

Selection and sustenance of information security controls Signup and view all the answers

Study Notes

The ISACA Risk IT Framework, 2nd Edition, outlines the identification and management of IT-related risks within an enterprise.
The framework facilitates the minimization of IT risks to acceptable levels, ensuring business processes continue during adverse events.
Compliance or internal control systems are leveraged to optimize IT-related risk management, recognizing risks beyond technical controls.
Awareness of technology benefits, partnerships, and potential cyber threats, internal control failures, vendors, suppliers, and partners is heightened.
Risk awareness, accountability, and responsibility are promoted throughout the enterprise.
Business context is used to understand the enterprise-wide IT risk exposure in terms of value.
Effective use of internal and external risk management resources maximizes enterprise objectives.
Risk management is a strategic necessity involving top executives, managers, risk management professionals, and external stakeholders.
Functions like business continuity, audit, and information security are crucial in the risk management process.
Business continuity focuses on preserving critical business functions and enabling the enterprise to withstand adverse events.
Collaboration between incident management and business continuity teams is vital for identifying potential threats and establishing recovery mechanisms.
An inadequate business continuity plan could hinder the enterprise's ability to meet recovery goals.
Audits are formal inspections and verifications to ensure adherence to standards or guidelines, accuracy of records, or the attainment of efficiency and effectiveness targets.
Objective, skilled, and independent personnel conduct audits, assessing risks, identifying vulnerabilities, documenting findings, and providing recommendations for issue resolution.
Effective risk management shapes the selection and sustenance of information security controls.
The three lines of defense in IT risk management consist of the first line managing risk, the second line monitoring controls, and the third line offering independent testing and assurance.
Controls, consisting of processes, policies, procedures, practices, infrastructure, applications, and organizational structures, serve as a response to risk.
Policies, standards, and procedures are documents that guide decision-making, align with enterprise objectives, and empower risk management.
Policies should be communicated, enforced, and complied with to prevent circumvention or increased liability.
Standards, sanctioned by external bodies or developed internally, mandate compliance requirements and provide authority and perceived excellence.
Proper adherence to standards ensures better support and maintenance, cost control, and authority for enterprise practices and procedures.

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Description

Explore the differences between operational and strategic risk management approaches in business. Learn about the emphasis on short-term goals for continuity at the operational level and the choices made about risk in relation to innovation at the strategic level.