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Risk & Strategy

Examining the evolution and expansion of risk, and what it means to organizations today

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Modern Governance Summit 2022
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Risk & Strategy
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Evolution, Expansion, Integration: The State of Risk Monitoring Today

It’s tempting to think of risk monitoring in traditional terms: a highly targeted checklist, a laser focus on the latest rules and regulations. But this definition has been evolving — and expanding.

Cybersecurity, financial conditions, vendor fraud and corruption, supply chain disruptions and ESG increasingly impact an organization’s risk profile. Today’s executive leadership also wants to know about:

Customers’ view of the risk
Safeguards for privacy
Scenarios that could damage the organization’s reputation
Risk across the supply chain, which increasingly involves third, fourth and even fifth parties

At Modern Governance Summit 2022, panelists discussed what risk teams need to keep on their radar, plus ways to bring all the pieces together.

Risk resilience - Gartner Survey Highlights

New Regulations Add to the Cyber/Data Privacy Challenge

Managing cybersecurity and data risk is already a complicated mission in today’s world. Thanks to AI-enabled hacking tools and social engineering tactics like phishing, threats have been escalating both in scope and sophistication.

In addition to third-party risks, new regulations also present more challenges. Sandy Garfinkel, who co-chairs privacy and data security for McNees Wallace & Nurick, LLC, addressed the SEC’s recently proposed rules around cybersecurity.

What the SEC and legislation are trying to say is ‘The madness cannot continue. Companies cannot continue to be breached in these ways.’ It is a slippery slope, and we have to balance encouraging companies to protect themselves better without opening them up to further harm.

— Myrna Soto, CEO and founder of Apogee Executive Advisors

“Directly regulating the activities of the board when it comes to cybersecurity oversight is a new frontier,” he said. “The SEC will now require reporting on public filings and more on what management is doing to implement security procedures.”

Myrna Soto, CEO and founder of Apogee Executive Advisors, added, “What the SEC and legislation are trying to say is ‘The madness cannot continue. Companies cannot continue to be breached in these ways.’ It is a slippery slope, and we have to balance encouraging companies to protect themselves better without opening them up to further harm.”

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Reputations and Political Risks Complicate Matters Even More

Today’s increasingly fluid and unpredictable environment adds new risk factors, like a supplier’s human rights record or whether a vendor’s bank falls on a foreign sanctions list.

I think it’s very important to start preparing for a world where corporations are not able to just be bystanders. Just look at what happened to Russia, where in less than a month several of the largest companies in the world pulled out and left Russia disconnected from the global economy in many important ways.

— Moisés Naím, Distinguished Fellow at the Carnegie Endowment for International Peace

To navigate political risk, audit teams must consider the current level of divisiveness in the political landscape. Speaking up and remaining silent both come with real risks.

Moisés Naím, bestselling author and distinguished fellow at the Carnegie Endowment for International Peace, said, “I think it’s very important to start preparing for a world where corporations are not able to just be bystanders. Just look at what happened to Russia, where in less than a month several of the largest companies in the world pulled out and left Russia disconnected from the global economy in many important ways.”

Shedding Light on the Entire Risk Mosaic

Risk across all these areas and issues is like a mosaic. Organizations need visibility to grasp the big picture and see how the individual pieces fit together to form a complete whole. Here’s where integrated risk management (IRM) technology plays an increasingly important role.

A centralized, scalable risk management platform can bring in data from disparate sources — from industry intelligence to threat monitoring to regulatory frameworks. This single source of truth strengthens a risk monitoring team’s ability to gauge their organization’s:

Risk profile: What’s most critical, and how susceptible is the company to these issues?
Risk appetite: How much is the company willing to invest to mitigate the threat?
Impact: What’s the ROI of risk mitigation activities?

Above all, Lisa Fine, Senior Counsel and Director of Compliance at Pearson, advised on the importance of clear communication to leadership: “Know your board. Your due diligence and data integrity work may not seem as compelling to them as an investigation because it doesn’t have the same ‘Who did what when’ aspects, so you must know your audience and know how to present the data to them.”

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