In the past year, 41% of organisations have faced three or more critical risk events. Enterprise risk management (ERM) and integrated risk management (IRM) are both essential to mitigate these risks.
In a recent post by Diligent, the company outlined the differences between ERM and IRM and how they can support risk management in a company.
Although ERM is a top-down strategy focusing on managing risk across an organization, IRM is a bottom-up approach to governing risk organization-wide within a single source of truth.
ERM deals with risks threatening strategic decisions at the board level, while IRM centralizes an organization’s risk profile into a single view. ERM is primarily concerned with strategic risks such as financial, reputational, technological, or competitive risks that can lead to business failure. IRM, however, creates a unified platform for cross-functional visibility across risk, audit, and compliance teams.
As technology becomes increasingly intertwined with business decisions, IRM and ERM are more interconnected than ever. Enterprise risk management addresses risks from high-level business decisions, while IRM mitigates threats arising from the daily use and integration of key technologies. When implemented together, organizations can protect themselves from top to bottom.
Deciding whether to start with IRM or ERM depends on a company’s size and maturity. Enterprise risk management can be costly and complex, which may not be suitable for small to mid-size companies. In such cases, IRM may be a better fit, as it is more affordable and easier to implement. As an organization grows, its approach to risk can evolve, typically introducing ERM into the cybersecurity framework.
ERM is essential, but implementing it prematurely can overwhelm a cybersecurity team with complex tasks, potentially overshadowing existing IRM and other cybersecurity efforts. Organizations with adequate time, budget, and staff should consider enhancing their security through ERM, starting with enterprise risk management software.
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