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Enterprise risk management: Get started in six steps

Let's say your organization doesn't have a formal enterprise risk management program. If you're at a big company, ERM might seem daunting because of silos, inertia and so on.

If you're at a small company, you might think you lack the resources to pull it off.

I propose that ERM is worth doing and doesn't have to be so complex if you simply "begin with the end in mind," as Stephen Covey says in The 7 Habits of Highly Successful Security Leaders. Or would have said if he'd written such a book.

The basis of my thoughts is COSO's ERM framework (link goes to a PDF of the Executive Summary). Here is the end to keep in mind as you begin your ERM efforts, taken from COSO's work:

You want to create

* a process
* that can be applied to strategy-setting
* in order to achieve business objectives.

COSO says the goal of ERM is "to provide reasonable assurance regarding the achievement of entity objectives." Translation: The goal is to enable the business. That should be your security department's goal, and (critically) your CEO must know that it's your goal. That's why I like COSO's formulation of ERM. It communicates to the business that you are working to help them achieve their objectives.

So here's an exercise that can help you begin to devise and refine a process that can be applied in strategy-setting. It doesn't require any org-chart-jitsu. It's just a beginning, but it can be a beginning that yields immediate payoff. And that will help gather support for more formal efforts down the road.

The exercise--the process--consists of six steps. Let's choose internal investigations as the first business activity to which we'll apply these steps. The six steps are based on COSO's seven components of ERM, modified for this beginner's exercise.