Unit 2: Risk Governance and Management

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Questions and Answers

Who is primarily responsible for the overall governance in most enterprises?

The chairperson

Special enterprise structures

The stakeholders

The board of directors (correct)

What is the primary focus of IT value in an enterprise?

Risk management activities

Resource optimization

Impact and contributions in value creation process (correct)

Cost savings only

What is the main goal of IT risk management?

Impeding value

Avoiding strategic plans

Focusing on data exploitation

Preserving value (correct)

What is crucial for effective risk management in an enterprise?

Balancing costs and benefits Signup and view all the answers

What does I&T risk governance and management strategy reflect in an enterprise?

Culture, appetite, and tolerance levels Signup and view all the answers

How should I&T-related risk be connected to business objectives in an enterprise?

By aligning with enterprise risk management when possible Signup and view all the answers

In effective enterprise governance of I&T-related risk, what does it mean to treat I&T-related risk as a business risk?

I&T-related risk is treated as a business risk and not as a separate type of risk Signup and view all the answers

What does it mean for I&T risk management to strive to advance the business or mission?

Advancing the business or mission instead of limiting or inhibiting it Signup and view all the answers

How does effective enterprise governance of I&T-related risk align with overall enterprise risk management?

By clearly defining risk appetite and risk tolerance Signup and view all the answers

What does it mean for I&T-related risk management to balance its costs and benefits?

Prioritizing and addressing risks in line with risk appetite and tolerance Signup and view all the answers

How is ethical and open communication promoted in the effective management of I&T-related risk?

By exchanging open, accurate, timely, and transparent information Signup and view all the answers

How is the dynamic nature of risk addressed in the effective management of I&T-related risk?

By giving advance consideration to changes in the enterprise and applicable laws and regulations Signup and view all the answers

What is the primary purpose of defining the risk universe in managing I&T-related risk?

To provide a structure for I&T-related risk management Signup and view all the answers

What does the risk universe consider in understanding I&T-related risk?

The value chain of the enterprise Signup and view all the answers

What do the Responsible (R), Accountable (A), Consulted (C), and Informed (I) components define in the RACI model?

Roles and responsibilities Signup and view all the answers

What is a key aspect of risk culture?

Open communication and transparency Signup and view all the answers

What is the significance of the Risk Roles and Responsibilities Matrix (RRRM)?

Describing the interaction between three lines of defense Signup and view all the answers

What is the primary focus of the Chief Digital Officer (CDO) in an organization?

Digital initiatives Signup and view all the answers

What is the role of the COO in an enterprise?

Operations accountability Signup and view all the answers

Who is responsible for aligning IT and business strategies in an enterprise?

CIO Signup and view all the answers

What does establishing risk criteria in an enterprise involve?

Evaluation of risk appetite, risk tolerance, and risk capacity Signup and view all the answers

What influences an enterprise's risk appetite?

Nature of the business Signup and view all the answers

What is the role of the CRO in an enterprise?

Enterprise risk management Signup and view all the answers

Who ensures the involvement of the board in major decisions in an enterprise?

Executive committee Signup and view all the answers

What does risk tolerance represent for an enterprise?

The ability of the enterprise to accurately predict future market trends. Signup and view all the answers

Who is responsible for financial management in an enterprise?

CFO Signup and view all the answers

What does the business continuity policy contain guidelines for?

Business impact analysis, contingency plans, and recovery requirements Signup and view all the answers

Which policy outlines expectations from employees and acceptable/unacceptable behavior?

Acceptable Use policy Signup and view all the answers

What does the quality management policy detail management vision on?

Quality objectives, acceptable quality levels, and duties Signup and view all the answers

What does the whistle-blower policy encourage employees to do?

Raise concerns and report suspicious activity Signup and view all the answers

What does the data privacy policy define ways to handle?

Personal data Signup and view all the answers

What is the key purpose of the crisis management policy in an enterprise?

Outlining the sequence for dealing with risk areas in crisis situations Signup and view all the answers

What is the primary focus of the information security policy in an enterprise?

Behavioral guidelines in protecting corporate information and associated systems Signup and view all the answers

Study Notes

IT value is not just about cost savings, but also the impact and contributions of IT investments in value creation process of the enterprise.
Risk Optimization: IT risk management is about preserving value, not impeding it, and should be integrated into enterprise risk management activities.
Resource Optimization: Ensures appropriate capabilities for executing strategic plans, provides effective resources, and focuses on data and information exploitation.
Risk Governance: Sets the direction and strategy for risk management, ensures risk-aware business decisions, and monitors risk management performance.
Effective risk governance establishes a common view of risk, integrates risk management into the enterprise, makes risk-aware business decisions, and ensures risk management controls are implemented and operating correctly.
Risk Management: Managers need accurate information to understand risks, mitigate negative outcomes, and make informed decisions. Effective risk management considers various factors, including enterprise dependencies, risks from economic, political changes, and possible natural disasters.
I&T Risk Governance and Management: The implementation of a risk strategy that reflects enterprise management's culture, appetite, and tolerance levels, considers technology and budgets, and addresses regulatory and compliance requirements.
An effective I&T risk management strategy connects I&T-related risk to business or mission objectives, aligns it with enterprise risk management when possible, balances costs and benefits, and promotes ethical and open communication.
A consistent approach to I&T risk management is crucial, integrated into daily activities, and aligned with the enterprise strategy.
Risk Communication Description:
Establishes the enterprise's strategy towards IT risk management (risk strategy, policies, procedures).
Monitors and predicts the state of risk management (status).
Offers solutions to manage risks effectively (options to mitigate risk).
Communicates risk events and their causes (event/loss data).
Stakeholder Communication About Risk:
Enhances understanding of IT risk management roles and responsibilities for various stakeholders.
Improves identification of key operational losses and risk indicators for operational risk managers.
Provides clearer positioning of security risk among other IT-related risks for IT security managers.
Enhances understanding of risk significance in investment and portfolio management for CFOs.
Supports informed monitoring and reviewing of IT governance roles for enterprise governance officers.
Improves understanding of operational IT-related risks for business managers.
Offers more effective risk assessment and management strategies for IT auditors.
Increases transparency and compliance understanding for regulators.
Improves evaluation of enterprise risk management practices for external auditors.
Provides clearer understanding of risk exposure for policy formulation for insurers.
Improves evaluation of enterprise risk management for rating agencies.
Enhances trust through transparent risk management practices for customers.
Increases awareness for informed decision-making for employees.
2.5.2 Risk Policy, Scope, and Workflow:
Establishes a foundation for managing risk across an enterprise with a clear articulation of the enterprise's tolerance for risk (risk appetite), specific thresholds indicating acceptable risk levels (risk tolerance), structured processes for risk identification, assessment, and management (risk governance), defined mechanisms for reporting risks to relevant stakeholders (risk reporting), and ensuring alignment with legal and regulatory requirements (risk compliance).
Defines the boundaries within which risk management activities operate (risk scope), which includes aligning risk management with organizational goals, defining parameters and methodologies for assessing risk, involving relevant stakeholders in risk identification and mitigation, and outlining processes for recording and maintaining risk-related information.
Outlines the sequence of risk management activities, including recognizing potential risks that could affect objectives (risk identification), evaluating identified risks in terms of impact and likelihood (risk analysis), assessing the significance of risks against established criteria (risk evaluation), and selecting and implementing measures to mitigate, transfer, or accept risks (risk treatment).
Continuously oversees and reassesses risks over time (risk monitoring).
Policies should be comprehensive and provide a superior management framework, with a hierarchical structure and a focus on integrating risk management norms or conditions into the enterprise policy framework, including defining scope and authority, roles and responsibilities of stakeholders, consequences of failing to comply with the policy, and the means for handling exceptions.
Risk Policy Types:
Defines how the risk of an enterprise needs to be governed and managed according to its business objectives (core IT risk policy).
Sets behavioral guidelines in protecting corporate information and associated systems and infrastructure (information security policy).
Sets guidelines on how to act in crisis situations and details the sequence for dealing with risk areas (crisis management policy).
Manages risk related to third-party services (third-party IT service delivery management policy).

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Description

Test your knowledge of risk governance and management with this quiz. Learn about the responsibilities of the board of directors and the chairperson in overall governance, as well as the evaluation of stakeholder needs and performance monitoring.