Don’t risk it! The importance of sound risk management

Let’s talk about something that might sound boring but is actually pretty important: managing risks in your business. Don’t worry – this isn’t about complex frameworks or expensive consultants. It’s about making smart decisions to protect what you’ve built.

Why Care About Risk Management?

You’re already managing risks every day, even if you don’t call it that. Every time you:

  • Back up your customer data
  • Install security cameras
  • Buy insurance
  • Provide learning and development for employees
  • Lock up at night

That’s risk management! You’re taking steps to protect your business from things that could go wrong. Let’s just make it a bit more organized.  Everyone’s a Risk Manager.

Here’s the first thing to know: risk management isn’t just for big corporations. In small to mid-sized purpose driven organizations, everyone from the product to customer success helps manage risk. It’s about:

  • Spotting potential problems before they happen
  • Making smart decisions about what to do about them
  • Taking reasonable steps to protect your business

Making It Work

Step 1: Assess the Risks

Get a team together and ask:

  • What keeps you up at night in your business area?
  • What could go wrong that would really hurt us?
  • What are other businesses like ours worried about?

Step 2: Size Them Up

For each worry you identify ask two questions:

  • How likely is this to happen?
  • How bad would it be if it did?

To keep the exercise moving, feel free to use broad categories of likelihood and impact such as High/Medium/Low.

Step 3: Decide What to Do – Risk Treatment Plan

You’ve got three main options:

  1. Risk Accept – The team can live with it (if it’s unlikely and wouldn’t be too bad)
  2. Mitigate – Put some controls in place to prevent it, detect it, or contain the damage
  3. Transfer – (usually through insurance)

Let’s look at some real examples:

Example 1: Large-scale Power Outage

  • What: Complete power loss at your primary and back-up data centres
  • Likelihood: Low
  • Impact: High
  • Solution: Risk Accept

Example 2: Laptop Theft

  • What: Someone steals a work laptop
  • Likelihood: Medium
  • Impact: High
  • Solution: Mitigate – implement full-disk encryption for all laptops and workstations

Example 3: Occupational Fraud

  • What: An employee commits financial fraud
  • Likelihood: Happens to everyone
  • Impact: Could be rough
  • Solution: Purchase insurance that covers this scenario

Timing and Frequency

So when should we complete a risk assessment? If no significant risk assessment work has been done to date, the best time to perform one is now. The first risk assessment exercise is the most cumbersome. It requires a time commitment from leaders in various teams and depending on folks prior experience with this type of work, some education may be necessary.

💡 Quick Start

  1. Gather your key team members
  2. List your top 5 business worries
  3. Rate each for likelihood and impact
  4. Decide what to do about each one
  5. Write it down and share with your team
  6. Review in 6 months

After the initial risk assessment, the risk treatment work of documenting accepted risks, remediation plans for remaining risks can take several months. At this point, it is common for teams to perform an annual assessment to update the prior-year’s risk assessment and monitor the status of mitigations. This annual cycle is also helpful for any compliance work that the team may be involved in, such as SOC 2 reporting.

Conclusion

Sound risk management practices have led to:

  • more responsible allocation of budget dollars
  • a focus on the most likely and impactful cybersecurity threats
  • pragmatic policy statements
  • practical selection of tools and controls
  • the ability to gain buy-in from all parties involved in cybersecurity controls

Let's get to work!

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