Risk it session in winnipeg stroud presented deck. approved for publication

Establishing Effective ERM
of IT: Implementation and
Operational Issues of the
New ‘Risk IT Framework’
Robert E Stroud CGEIT
VP Service Management & Governance, CA Technologies
International Vice President, ISACA

Establishing Effective ERM of IT: Implementation and Operational Issues of the New ‘Risk IT Framework’
Copyright © 2010 CA Robert.Stroud@ca.com Blog:www.ca.com/blogs/stroud
international VP, ISACA
service management & governance evangelist CA
— 29 years in Industry Experience
— 15+ years banking industry
— VP Service Management & ITSM & IT Governance CA
— International Vice President ISACAITGI
— Former Chair COBIT Steering Committee & chief architect
— IT Governance Committee
— Contributor to COBIT V4 and V4.1
— Contributor to the Control Objectives for Basel II
— Contributor to ITILCOBITISO17799 Management Overview
— ITIL v3 Update Management Board and Reviewer
— ITIL v3 ITIL Advisory Group, Mentor & Reviewer
— Author ITIL Business Perspective Volume 2
— Executive Board itSMF International Treasurer and Director
Audit Standards & compliance
— Former Board Member USA itSMF
2

Important Information on the content within….
—The Risk IT Framework and The Risk IT Practitioner
Guide including select text and figures featured within
this presentation are the property of ISACA.
Copyright © 2005 - 2009 ISACA. All rights reserved.
—ISACA, ITGI and COBIT are registered trademarks of
ISACA. Val IT and Risk IT are trademarks of ISACA.
—This presentation is presented with the permission of
ISACA.
3

Abstract
—IT risk is receiving growing attention from executive
management, risk managers and regulators to indentify
and correctly manage risk in the operational environment.
This pressure requires the implementation of an effective
risk management process. ISACA recently delivered the
RISK IT Framework to assist IT too effectively identify risk
and how to develop processes to accept or mitigate risk.
—When leveraged in conjunction with the COBIT®
Framework which provides the generally accepted
control framework, the RISK IT Framework will deliver an
effective enterprise risk management solution.
—This session will demonstrate how to establish effective
enterprise risk management of IT including
implementation and operational issues using ISACA’s
new ‘Risk IT Practitioner Guide’.
4

Agenda
—Introduction
—The ‘Risk IT Framework’
—The ‘Risk IT Practitioner Guide’ –
Managing Risk in Practice
—Risk Governance
—Risk Evaluation
—Risk Response
—Summary

risk and value are intertwined!
—Risk has 2 sides
− Value preservation
− Value creation
IT related risk = materialised business impact because of IT related
event

IT (Related) risks
ITGI survey 2008, on IT related problems:

it related risk management - summary
—Various standards & frameworks available, but either:
− Generic Enterprise Risk Management oriented
− IT Security oriented
—No comprehensive
IT Related Risk
framework available
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risk it principles

Risk IT
—Risk IT is a framework based on a
set of guiding principles and
featuring business processes and
management guidelines that confirm
these principles
—The Risk IT framework is to be used
to help implement IT governance
—Organisations that have adopted (or
are planning to adopt) CobiT as their
IT Governance framework can use
Risk IT to enhance risk management.

Purpose of "'Risk IT'"
The Risk IT framework explains IT risk and
will enable users to:
− Integrate the management of IT risk into the
overall enterprise risk management of the
organisation
− Make well-informed decisions about the extent of the
risk, the risk appetite and the risk tolerance of the
enterprise
− Understand how to respond to the risk
In brief, the framework allows the enterprise to
make appropriate risk-adjusted decisions.

The Risk IT Framework

‘Risk IT Practitioner Guide’ – managing
risk in practice

Risk IT practitioner guide

suppemental tools and materials
— The Risk IT Practitioner Guide, is supported by an
implementation tool kit, containing the following templates:
− Enterprise IT Risk Assessment Form (figure 7)
− Risk Communication Flows (figure 14)
− Template Risk Register Entry (figure 36)
− Generic IT Risk Scenarios (figure 40)
− Generic IT Risk Scenarios and Mapped to COBIT and Val IT
Processes (figure 41)
− Generic IT Risk Scenarios and Environmental Risk Factors (figure 42)
− COBIT Controls and Val IT Key Management Practices to Mitigate IT
Risk (figure 48)

risk governance

business – enterprise risk management (ERM)
—Enterprise risk management (ERM) includes the methods
and processes used by organizations to manage risks
and seize opportunities related to the achievement of
their objectives.
—ERM provides a framework for risk management
—By identifying and proactively addressing risks and
opportunities, business enterprises
protect and create value
—ERM can also be described as a
risk-based approach to managing
an enterprise

the definition of it risk
—IT risk is the business risk associated with the use,
ownership, operation, involvement, influence and
adoption of IT within an enterprise.
—IT risk consists of IT-related events that could potentially
impact the business.
—IT risk always exists, whether or not it is detected or
recognised by an organisation

it related business risk

it risk in the risk hierarchy

essentials of risk governance
—Risk Appetite and Tolerance
—Responsibilities and accountability for
IT Risk Management
—Awareness and Communication
—Risk Culture

risk appetite and tolerance - definition
—Risk appetite
The broad-based amount of risk a company
or other entity is willing to accepts in
pursuit of its mission (or vision)
—Risk tolerance
The acceptable variation relative to the achievement of
an objective (and often is best measured in the same
units as those used to measure the related objective)

risk appetite
—Risk appetite is the amount of risk an entity is prepared to
accept when trying to achieve its objectives. When
considering the risk appetite levels for the enterprise, two
major factors are important:
—The enterprise‘s objective
capacity to absorb loss
—The culture towards risk
taking – cautious or
aggressive

risk appetite - examples

Virtualization and the Cloud - The Death of ITIL? Or the Opportunity of a Lifetime? Copyright © 2010
CA Robert.Stroud@ca.com Blog: www.ca.com/blogs/stroud
risk tolerance
Risk tolerance is the tolerable deviation from the level set by the risk
appetite definition, e.g., standards require projects to be completed within
the estimated budgets and time, but overruns of 10 percent of budget or 20
percent of time are tolerated.

responsibilities and accountability for it risk
managment

awareness and communication benefits
—Executive management‘s understand the actual exposure
to IT risk, enabling definition of appropriate and informed
risk responses
—Awareness amongst all internal stakeholders of the
importance of integrating risk and opportunity in their
daily duties
—Transparency to external stakeholders regarding the
actual level of risk managment processes in use

Implications of poor communications
—False sense of confidence at the top on the degree of
actual exposure related to IT
—Unbalanced communication to the external world on risk,
especially in cases of high but managed risk, may lead to
an incorrect perception on actual risk by third parties
such as clients, investors or regulators
—Perception that the enterprise is trying to
cover up known risk from stakeholders

what to communicate

Risk Culture

Risk Evaluation

business impact

it risk scenario development

risk factors

risk scenarios

example scenario list

risk evaluation

key risk indicators (KRIs)
40

risk response options
41

risk response options and influences
42

parameter for risk response selection
43

risk response prioritisation
44

risk response & prioritisation
45

Risk and Opportunity
46

CobiT, Val IT & Risk IT
47

summary
—Risk IT saves time, cost and effort by providing a clear
method to focus on IT-related business risks
—Risk IT provides the guidance to help executives and
management ask the key questions
—Risk IT allows organizations to make better risk-adjusted
decisions
—Risk IT allows organizations
to manage their enterprises
risk is managed more
effectively

summary
—Risk and value are two sides of the same coin
—Risk is inherent to all enterprises
—Balance must be struck that avoids value destruction and
ensures that
opportunities for value
creation are not missed

Thank you
Contact details:
Email: Robert.Stroud@ca.com
Tel: (631) 880 2544
BLOG: www.ca.com/blogs/stroud
Twitter: www.twitter.comRobertEStroud
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