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More Than Buzzwords: Cyber Risk Governance

Author: KuppingerCole’s Matthias Reinwarth (@mreinwarth)

Today, companies are increasingly operating on the basis of IT systems and are thus dependent on them. Cyber risks must therefore be understood as business risks. The detection and prevention of cyber security threats and appropriate responses to them are among the most important activities to protect the core business from risks. 

But in practice, however, many challenges arise here. The requirement to arrive at a uniform and thus informed view of all types of business risks often fails due to a multitude of organizational, technical and communication challenges:  

Technical risk monitoring systems in the enterprise (e. g. systems for monitoring compliance with SoD rules or systems for monitoring network threats at the outer edge of an enterprise network) are often extremely powerful in their specific area of application. Interoperability across these system boundaries usually fails due to a lack of common language (protocols) or the semantics of information to be exchanged (uniform risk concepts and metrics).

The same thing is happening in the organization of large organizations: although it is only a few years in which we have observed this trend, this leads to independently operating IT operations teams, IT security teams and (cyber) governance teams that focus on individual tasks and their solutions with which they deal with individual, but very similar problems. They typically act without adequate integration into a corporate security strategy or a consolidated communication approach for the joint, coordinated management of risks. They do this without correlating the results to determine a comprehensive IT security maturity and thus without identifying the overall risk situation of a company. 

Management boards and executives must act and react on the basis of incomplete and mostly very technical data, which can only lead to inadequate and incomplete results. The implicit link between cyber risks and business risks is lost when only individual aspects of cyber security are considered. Management decisions made on the basis of this information are usually far from adequate and efficient. 

The only way to solve this problem is to move from tactical to strategic approaches. Recently the term “Cyber Risk Governance” has been coined to describe holistic solutions to this problem, covering organization, processes and technologies. More and more companies and organizations are realizing that cyber risk governance is a challenge that needs to be addressed at management level. Cyber security and regulatory compliance are strong drivers for rethinking and redesigning a mature approach to improve cyber resilience.  

This requires an adequate strategic approach instead of tactical, more or less unplanned ad hoc measures. A strong risk governance organization, a strategic framework for a comprehensive cyber risk governance process and related technological components must underpin it. This can only be achieved by bundling corporate expertise, taking a holistic view of the overall risk situation and understanding the sum of all risk mitigation measures implemented. 

If the situation described above sounds familiar, read more about “Cyber Risk Governance” as a strategic architecture and management topic in the free KuppingerCole “White Paper: TechDemocracy: Moving towards a holistic Cyber Risk Governance approach.” 

Matthias Reinwarth is a lead advisor and senior analyst at KuppingerCole. Read more KuppingerCole blogs here.

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