What is Integrated Risk Management (IRM)?

Written by David Quaid | Mar 4, 2024 9:37:17 PM

The shift from traditional GRC to Integrated Risk Management (IRM) marks the changing needs of modern information security leaders and their teams. Rather than putting compliance first, IRM enables an organization to manage its unique set of risks and meet compliance requirements as part of its mission.

What is Integrated Risk Management (IRM)?

IRM is a set of practices and processes supported by technologies that improve decision-making and visibility into an organization’s security and risk posture. IRM recognizes that each organization faces unique risks and threats and, as a result, must take a risk-centric (not compliance-focused) approach to information security.

According to Gartner, the integrated risk management definition has a specific set of practices:

Strategy: Enablement and implementation of a framework, including performance improvement through effective governance and risk ownership
Assessment: Identifying risks, evaluation, and prioritization of risks
Response: Identification and implementation of mechanisms for risk reduction
Communication and Reporting: Provision of the best or most appropriate means to track and inform stakeholders of an enterprise’s risk response
Monitoring: Identification and implementation of processes that methodically track governance objectives, risk ownership/accountability, compliance with policies and decisions that are set through the governance process, risks to those objectives, and the effectiveness of risk mitigation and controls
Technology: Design and implementation of an integrated risk management solution (IRMS) architecture or an integrated risk management framework

Integrated Risk Management Framework

An IRM framework is a holistic, organization-wide approach to identifying, assessing, mitigating, and monitoring risks. It aims to create a unified view of all potential risks and ensure they are managed effectively and consistently across various departments and functions. It accounts for Governance, Risk Identification, Risk Assessment, Risk Reporting, Risk Culture, and more. Example of an IRM Framework in Action:

A financial institution might use an IRM framework to:

1. Identify risks associated with cyberattacks, market volatility, and credit defaults.
2. Assess the likelihood and impact of these risks.
3. Develop mitigation strategies, such as investing in cyber measures, diversifying investments, and implementing robust credit underwriting processes.
4. Monitor key risk indicators.
5. Report on risk exposures and management activities to the Board and executive stakeholders.

Organizations require an integrated view across all business units, risk and compliance functions, key business partners, and supply chains to fully evaluate risk. Security teams need enterprise-wide transparency to identify different types of risk, including financial and operational risks. This actionable definition describes IRM as reconfiguring legacy GRC activities using a risk-aware culture and enabling technologies that improve decision-making and performance.