Firms face complexity driven by changing regulations, external risks, and evolving business operations and tech. These drivers necessitate using risk maturity models, risk appetite statements, and AI tools to facilitate risk management strategies.
Risk management has taken center stage in many firms grappling with economic uncertainties, rapid business change, and other potential business risks. In 2024, they must continue to recognize that stronger risk management programs are required to embed a culture of ethics, risk management, and integrity.
Here are the top risk management trends to look for in 2024.
-
Expansion of Risk Maturity Models (RMM)
More firms are considering an RMM to manage the increasing interconnectedness of risks. An RMM is an assessment tool for evaluating a firm’s progress toward its risk management goals. These models can be used to plan and implement strategies and communicate the strategy within the company.
Adopting an RMM requires addressing risk management processes and solid tech to support them. In 2024, firms must form a team of risk stakeholders with technical and business expertise. Such a team will help make rapid and smart risk-based decisions, establish risk management policies, and enforce controls.
-
Increased Use of Risk Appetite Statements
The main aim of risk appetite statements is to provide clarity and direction about the risk levels the firm is willing to accept in pursuit of its strategic objectives. These statements serve as a guiding framework for decision-making processes.
It ensures that the firm’s approach to security aligns with its overall risk tolerance and business strategy. With risk appetite statements, firms can prioritize resources, enforce the right security measures, and manage potential threats.
Also, these statements facilitate clear communication about risk preferences within the firm and with external stakeholders. In 2024, these statements will continue to help expectations and drive a culture of security awareness.
-
Firms Will Tune into More Risk Mitigation Tools
In an era of unpredictability, tools to measure and mitigate risks are essential and are improving. This shift is not just about preventing risks but also safeguarding reputation, maintaining customer trust, and ensuring long-term viability.
Among the advances are internal and external risk-sensing tools. These tools help generate the risk intelligence needed to detect trending and emerging risks.
Risk mitigation tools will also help-
- Gain a complete understanding of risks across the firm.
- Capture leading risk indicators that show how risk is developing over time.
- Make better management decisions with real time risk reporting
- Gain a clear sense of accountability for the actions taken to mitigate risk.
In 2024, firms will continue to use these tools to predict better and detect potential threats. The risk management tools will help adopt a solid cybersecurity measure and integrate compliance management systems to explore the changing regulatory landscape.
Also Read: Enterprise Risk Management Challenges
-
Risk Management Meets Digital Transformation
As business processes go digital, IT ecosystems become complex. So, adopting an integrated Governance, Risk Management & Compliance (iGRC) program to simplify risk management activities is essential.
With iGRC, firms can enforce security measures to protect customer and private data. This is essential due to increasing cyber risks that hinder users’ data and privacy.
Also, many firms are unaware of their diverse data types, how they are organized, or if they are noncompliant with regulations. So, the regulations on how firms handle data should be clear and must follow a risk-based approach.
iGRC helps firms comply with data privacy regulations like the GDPR. This helps build customer trust and prevent penalties.
In 2024, IT leaders and CISOs must partner to identify, assess, and mitigate risks as per the firm’s risk appetite.
An integrated governance model can help communicate strategies and tech objectives across the firms. This ensures the risk management component is effectively integrated into broader digital transformation plans.
-
AI: Manages Risk and Introduces New Risks
As per a recent report by CyberArk, “2023 Identity Security Threat Landscape Report,”
AI plays a vital role in risk management initiatives. One of the most important advantages of AI is its ability to identify and predict risks accurately and quickly. In the context of cybersecurity, traditional heuristic or rule based methods may become outdated.
This is because attackers increasingly use AI to launch new, unforeseen attacks. Chatbots are another powerful tool in the risk management arsenal. They can answer common risk management queries and assess knowledge bases to analyze past risk incidents and scenarios. AI tools can help ensure compliance with legal regulations.
It also helps manage model risk by performing stress tests on quantitative and qualitative models to meet regulatory requirements.
On the flip side, AI comes with some risks that firms must manage. To manage AI risks in cybersecurity, firms must-
- Understand whether the AI risk management framework is effective. This can be done by developing case studies and running tests.
- Design a responsible AI strategy. This will help balance their idealistic commitments to responsible AI principles with the resources required to support and sustain a program.
- Establish guidelines that align the governance of AI systems with the company’s values and objectives. Without proper guidelines, implementing an AI governance policy could fail due to internal friction. This results in the inability to manage AI risks effectively.
- Address risks that arise from using externally developed AI tools.
In 2024, firms must effectively manage AI’s inherent risks by ensuring their risk management framework is effective, designing responsible AI strategies, and addressing risks that stem from using externally developed AI tools.
Conclusion
The above trends reflect a holistic approach to governance, risk management, and compliance. These trends emphasize the need for ethical and compliant practices beyond a firm’s immediate boundaries.
In 2024, firms must continue integrating risk management into their business operations. They must align them with strategic objectives to foster a culture of resilience and integrity.
Moreover, tech advancements have changed how firms manage compliance and risks. It is crucial to embed compliance and risk management practices deeply within an organization by engaging employees and creating strategies at all levels.
Risk management strategies are not just about managing risks or complying with regulations; they are about creating a sustainable, resilient, and ethical ecosystem to help firms thrive in an ever-changing global risk landscape.
For more such updates follow us on Google News ITsecuritywire News. Please subscribe to our Newsletter for more updates.
