IT Governance, Risk, and Compliance (ITGRC)

Businesses rely on their IT departments and resources for competitive advantages and business to business transactions and cannot afford to apply to IT anything less than the same level of commitment they devote company assets. IT offers extraordinary opportunities to transform the business; however IT must deliver value and enable the business, and IT-related risks must be mitigated. Governance of IT, Information Security, and Risk Management encompasses several initiatives for executive management. At a glance, they must be aware of the role and impact of IT on the enterprise, define constraints within which IT professionals should operate and measure performance, understand risk and obtain assurance.

Corporate Governance:

Before discussing Information Technology and Security Governance, one must look at that broader issue of Corporate Governance in the enterprise. Corporate Governance is defined as a structure for determining organizational objectives and monitoring performance to ensure that business objectives are attained. Corporate Governance became a dominant business topic in the wake of many corporate scandals – Enron, WorldCom and Tyco, and is becoming increasing popular today in the wake of TJX credit card breach case. Companies generating interest in corporate governance is not new, but the severity of the financial impacts of the many scandals undermined the confidence of the investment community and corporate stakeholders.

Good corporate governance is important to investors and shareholders. As a matter of fact, many investors, before making an investment decision, validates and ranks the company’s corporate governance on par with its financial indicators. As a matter of fact, some investment firms are prepared to pay large premiums for investments in companies with high governance standards.

Whilst there is no single model of good corporate governance, it is noted that in many countries corporate governance is vested in a supervisory board that is responsible for protecting the rights of the shareholders and stakeholders. The board, in turn, works with a senior management team to implement governance principles that ensure the effectiveness of organizational processes.

IT Governance Role:

IT governance is the responsibility of the board of directors and executive management. It is an integral part of corporate governance and consists of the leadership and organizational structures and processes that ensure that the organization’s Information Technology sustains and extends the organization’s strategies and objectives. Also, IT governance is the term used to describe how those persons responsible for governance of an entity will consider IT in their supervision, monitoring, control and direction of the entity. How IT is applied within the business will have an immense impact on whether the business will attain its vision, mission or strategic goals. In today’s economy, and with most businesses reliance on IT for competitive advantage, businesses simply cannot afford to apply to their Information Technology anything less than the level of commitment they apply to overall governance.

Who is Responsible for IT Governance and Risk Management:

Board of Directors (BODs) and executive management have a joint responsibility to protect shareholder value. This responsibility applies just as stringently to valued information assets as it does to any other asset. BODs and management must recognize that securing information and information assets is not just an investment; it is essential for survival in all cases and for many it guarantees competitive advantage. Additionally BODs and management must accept the responsibility of ensuring that:

• IT Governance is aligned with the overall Corporate Governance structure within the enterprise.
• IT Governance includes an alignment with the Enterprise Risk Management Program, which is a responsibility of the BODs and Management
• There is a balance of the operational and economic costs of protective measures and achieve gains in mission capability by protecting the IT systems and data that support their enterprise’s business strategy and objectives.
• Risks and threats are identified, categorized and mitigated to acceptable levels.
• IT Governance obtains coordinated and integrated action from the top down.
• IT investments are not mismanaged or misdirected.
• IT Governance rules and priorities are established and enforced.
• Trust is demonstrated toward trading partners while exchanging electronic transactions.

In Closing:

IT governance covers a number of activities for the board and for executive management, such as becoming informed of the role and impact of IT on the enterprise, assigning responsibilities, defining constraints within which to operate, measuring performance, managing risk and obtaining assurance.
IT Governance is focuses two categories: (1) IT’s delivery of value to the business and (2) mitigation of IT risks. In order to have an effective IT and Security Governance strategy businesses must address the following questions:

• What decisions must be made to ensure effective management and use of IT?
• Who should make these decisions?
• How will these decisions be made and monitored?

Always remember that managing information security risks as part of operational risk involves establishing an effective IT governance and control architecture.


Thank you

James Sayles
MBA, BS, CISSP, CISA, CISM
Vice President, Chief Risk and Compliance Officer
Favored Solutions

Best Practices for Performing Risk Assessments

In today’s blog, we will discuss best practices for performing risk assessments.

Assessing business and information risk, in most organizations, are often challenging and performed in silos. This is why risk experts are encouraging companies to take a closer look at their risk assessment strategies and think of ways to simplify, integrate, and collaborate on their assessment tasks across the enterprise.

Risk Assessment Frequency:

This topic is often debated; however, in my professional opinion, organizations should perform their risk assessments at least annually. The most common approach is that companies asses their enterprise business risks on a calendar year. I also recommend that most organizations review their risk assessment strategies on a quarterly basis as business processes, systems, strategies, etc, may also change during the course of the year. This way the annual risk assessment plan will account for those changes. I am also seeing organizations that have very inefficient risk assessment strategies and some without any at all. The only way to ensure that your organization is risk intelligent is to implement an effective risk assessment strategy that covers the entire organization. Risk assessment results should stored so that risk trending and analysis can be performed.

Tearing Down the Risk Assessment Silos:

The most challenging aspect of a successful enterprise risk assessment strategy involves “the silo approach to risk assessment”. If you search businesses today, you will find that a smaller percentage do not have a “central” ERM group or Chief Risk Officer that will collaborate business process leaders to consolidate risk assessment activities. In order to give BODs oversight of business risks, organizations should seek to improve their efforts by bringing risk assessment efforts under one “umbrella” for centralize management and reporting.

Measuring and Weighing Risks:

There are many ways that an organization can measure and weigh their risks. The most common measurement of risk is likelihood and magnitude of impact. I have also worked with clients that measured their risks based on complexity, speed of onset, and/or dollar value. The key here is to choose a measurement that is right for your business and modify over time or assessment needs change. As far as weighing or ranking risk, I prefer to use the NIST model or approach to do so. It relatively simple and do not require you to be a mathematician to rank and score your risks.

I would like to hear your views on the following:

1. How do you measure and rate your risks?
2. Do you have a centralized risk assessment strategy?
3. Do you have a Chief Risk Officer?

Thank you

James Sayles
MBA, BS, CISSP, CISA, CISM
Vice President, Chief Risk and Compliance Officer
Favored Solutions