An integrated risk management strategy keeps your business safe from threats you can control and those you can’t predict. It helps you anticipate, prepare for and respond to all the risks your company faces quickly and effectively.
In this article, you’ll learn about the many vulnerabilities an integrated risk management program will guard your business against. You’ll also learn how to create and launch a risk management strategy and ensure its success.
What is integrated risk management?
Integrated risk management (IRM) is a process businesses use to identify, assess and manage internal and external threats and vulnerabilities. Senior management can spot and resolve problems earlier and faster, achieve regulatory compliance and protect their assets and reputation.
Imagine an e-commerce business that wants to enter a new market abroad. An IRM program would help it better assess and manage risks such as local regulations, regional supply chains, shipping logistics and cultural differences.
Another example is a growing B2B tech company looking to achieve its business objectives as it scales. A risk management approach can help it spot risks to expansion, like changes in data regulation and the emergence of new competitors.
Is IRM just a risk assessment? IRM goes beyond a risk assessment, which identifies potential threats and how to deal with them. It continually monitors and analyzes risks across your business, backed by an action plan to manage crises quickly and effectively.
There are many threats to businesses. Most of these threats will fall into one of the three core groups:
Cyber risks. Vulnerabilities in IT networks that can lead to the theft or copying of customer data and intellectual property, like software code and proprietary algorithms.
Operational risks. Failures in internal business processes, operating systems, third-party supply chains, production equipment and human resources.
Enterprise risks. Challenges caused by poor internal decision-making, changing regulations, emerging competition, market volatility, financial instability and reputational damage.
You’ll learn how IRM can protect your business against these threat types in a moment. First, let’s review the advantages of creating an IRM system for your business.
What are the benefits of integrated risk management?
The purpose of IRM is to provide companies with a holistic view of the threats they face, helping them avoid disruption (at best) and prevent the business from going under (at worst).
For instance, it can save the business from costly cyber attacks. Global tech company IBM found that companies with a risk management plan and team saved an average of $2.66 million when hit by a data breach.
These attacks are not as rare as you might think. DTEX’s Cost of Insider Risks: Global report found that 71% of businesses handled between 21 and more than 40 insider threat incidents, indicating a real and present danger for everyone.
IRM also helps business leaders avoid damaging situations where a vulnerability in one area, like supply issues, might escalate into a major operational disruption or reputational crisis.
An IRM framework acts as a single source of truth, allowing anyone with access to make strategic decisions on the spot. It allows firms to prioritize which risks to mitigate first, enabling more efficient use of time, budget and resources.
A successful IRM program can also help deliver these business outcomes:
Increased agility. By monitoring changes in technology, markets and regulations, firms quickly adapt their business strategy to stay compliant and competitive.
Improved stakeholder confidence. The right risk management processes build trust with investors and lenders, leading to better deals and opportunities.
Engaged employees. Involving staff in risk identification and risk management activities empowers your staff and improves your company’s overall threat awareness.
Running a business comes with many challenges, whether you manage a small local company or a global conglomerate. No matter where you are in your business’s lifecycle, IRM can prevent the worst from happening, avoid expensive crises and reduce wastage.
6 steps to create your integrated risk management solution
Creating an IRM program is a critical move for any business and involves a decent amount of upfront work. The process is not complex, meaning any business owner or leader can assess potential threats and devise a plan of action.
Follow these six steps to create your company's integrated risk management framework.
Step 1. Identify risks within your business
Run an internal audit to understand your company’s risk landscape and create an integrated view of the threats and solutions.
Most companies will identify risks in a risk register – a database that:
Identifies all the threats and vulnerabilities you might face
Ranks how serious and impactful each threat might be
Describes how you will plug that particular vulnerability
Sets out what action you’ll take if that risk materializes
Your risk register will contain information on the three main types of commercial risk: cyber risk, operational risk and enterprise risk.
Cyber threats entail risks to your company’s data, digital assets (like proprietary software and trade secrets) and IT infrastructure.
An example of a risk register entry relating to a cyber risk might be:
Threat: Ransomware |
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Operational risks can significantly impact your company’s productivity and profitability.
Here’s an example of operational risk that may appear in a register:
| Threat: Technological failure |
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Enterprise risk management addresses threats caused by external factors like regulation changes and internal factors like acquisitions.
An enterprise risk profile in your register may include this threat:
| Threat: New competitor |
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Identifying threats and vulnerabilities is a critical first step in developing an effective IRM strategy, regardless of the size of your company or the sector you operate in. A comprehensive risk register gives you a complete and clear picture of the range of hurdles you may face.
Step 2. Decide on your level of risk appetite
Your “risk appetite” is how much business risk you’re willing to accept to achieve your commercial goals. It’s a crucial concept in risk management, allowing you to take chances in business while staying safe within your financial or operational means.
Businesses can have various levels of risk appetite, such as:
Averse. Risk avoidance is your top priority as a company and you’ll steer away from activities that put your business at risk.
Minimalist. You take as little risk as possible, even if it means missing out on opportunities. You are both risk- and failure-averse.
Cautious. You prefer activities where you can control most of the risk. You may take bigger risks but only if the potential benefits outweigh the potential downsides.
Flexible. You’re open to taking bigger risks for the promise of greater rewards but with a clear reason for doing so. You generally want to avoid risk but are willing to take the chance and handle any problems if something goes wrong.
Open. You actively seek out opportunities with high rewards, even when faced with considerable risk and uncertainty. You’re fully aware that some projects might fail but are ready for the challenge.
The level of risk you decide to accept is essential when you’re developing an IRM program for your business. Risk appetite shapes how your company handles threats and which business activities and opportunities you pursue.
Some specific activities may require higher or lower levels of risk than your overall risk appetite. This is called risk tolerance, which we’ll cover shortly.
Step 3. Prioritize threats in a company risk matrix
As you build your risk register, you should also start creating a risk matrix (these two documents go hand-in-hand).
Risk matrices are useful visual guides for determining the level of risk individual threats present and how likely they are to happen. Rather than scanning through pages of an IRM document, a risk matrix helps you quickly prioritize risks at a glance.
For each risk you identify in your risk register, assign two scores:
Impact. 1 for insignificant impact to 5 for catastrophic impact
Likelihood. 1 for rare to 5 for almost certain
Add the results together and place each risk in a grid like this:
When prioritizing which risks to target first, start at the top right of the grid as these represent the greatest threat to your entire organization.
Tip: When determining the severity of each threat, consider your business goals and KPIs. If a risk impacts a critical KPI such as time to resolution for customer service, you’ll know it should go higher in your matrix.
Step 4. Deciding how you manage individual risks
Now that you have a clear view of the risks the business faces, your next decision is how to handle each one.
The four main approaches to managing risk are:
Avoidance. Stop an activity altogether because it’s too high risk.
Acceptance. Do nothing but accept it might lead to a potential loss, particularly if the cost of addressing the threat is too high.
Mitigation. Continue the activity but mitigate the risk with contingency plans in place.
Transference. Pass the risk onto someone else like an insurer, vendor or outsourcer.
For example, here’s how you might handle the threat of legal action against you on an intellectual property matter:
| Threat: IP-based legal action |
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The risk management approach in this example is risk mitigation. You actively take steps to protect yourself against IP infringement and have a plan to manage any allegations against your business.
In many cases, your approach to risk will match your company’s risk appetite.
However, you may choose to apply risk tolerance to certain types of threats – how far outside your level of risk appetite you’re willing to go to sanction a particular activity.
For example, your company’s risk appetite level may be minimal but you choose to set a higher risk tolerance for your research and development team. You might feel more relaxed about risk for this team because innovation is a priority to stay ahead of competitors, meaning you’re willing to take the risk even though you know some projects won’t work out.
Likewise, you may be a server vendor willing to take risks in most areas but your value proposition rests on your service never going down. Your operational risk tolerance may, therefore, be much stricter.
While a consistent approach to managing risk across your company is essential, being flexible in how you handle different threats can give you an edge. By adjusting your risk strategies to fit specific situations, you protect your core business while pursuing innovative ideas that could lead to big wins.
Step 5. Appoint risk leaders in the business
Senior managers in the business should drive your company’s risk management initiative. While they should hold ultimate responsibility, it’s important to actively involve staff at all levels. They can often help identify and address new and emerging risks that board and senior leaders can’t see yet.
There are many ways to structure responsibility and collaboration in IRM planning, and the right one will depend on your business.
Here are a few ways to get your people involved:
Appoint a Chief Risk Officer (CRO). The CRO oversees and manages the IRM program. Many large businesses and companies in highly regulated industries have CROs on the board.
Involve senior management. Task senior leaders with managing risk areas covered by their general roles. For example, the CTO should be responsible for cybersecurity and data privacy risks while the COO manages quality control and supply chain vulnerabilities.
Establish a risk committee. Hold regular meetings involving the CRO and other senior management. Invite middle managers to meetings for their on-the-ground insights to get a comprehensive view of risk across the business.
Strong leadership is key in creating a risk-aware culture. With input and engagement from mid-level employees in charge of day-to-day business activities, senior executives can create a comprehensive and effective approach to identifying and handling threats to the company.
Step 6. Plan for IRM reviews and updates
Integrated risk management is a dynamic, continuous process. As your business environment evolves, so do the risks you face, making it crucial to revisit and update your IRM strategy periodically.
Regularly refine your plan to ensure you promptly address emerging threats or materialized risks.
If your business operates in international markets, monitor the sanctions list regularly to avoid inadvertently doing business with restricted entities or individuals.
Similarly, if a trusted supplier starts missing shipping dates, revisit your third-party risk register and seek out new suppliers so you can continue to supply your customers.
Between reviews, regularly monitor your risk management dashboard and reports to ensure your critical areas are within your risk tolerance. If a department or KPI is in danger, implement corrective actions to improve outcomes like retraining staff or investing in additional resources.
3 tips for launching your IRM program
Now that your initial preparation is complete, here are three tips to launch your IRM program.
1. Adapt your tech stack
You may be able to configure your existing hardware and software to support the operation of your risk management solution.
For example, here’s how you could use Pipedrive’s all-in-one CRM to manage aspects of your organization’s risk effectively:
Set up two-factor authentication and single sign-on to protect your business data
Use the dashboard to track metrics like Net Promoter, which may alert you to underlying issues like customer satisfaction or product quality issues
Manage customer data and deal information in one place to protect against data loss from computer issues or security threats
Determine what data users can see based on their account settings so they only access what they need to do their job
As well as adapting your current software, you can improve the performance of your current hardware.
Consider adding encryption and signatures to keep sensitive information safe from people who shouldn’t access it. Also, make sure your Wi-Fi network has strong security settings and your business software has the latest security patches.
These steps can greatly improve how you manage risks without needing investment in new technology.
2. Train your employees
Your employees need to know how to identify and respond to potential business risks. Human error is often to blame for serious incidents, allegedly causing 68% of data breaches in 2024.
Educate each team about the risks related to their line of work. For example, you could train your:
Finance team on fraud detection and prevention
Marketing team on GDPR and CCPA compliance requirements
Operations team on sanctions and supply chain management
You can also use the courses provided by your business software suppliers to train your employees.
For example, Pipedrive Learn provides tutorials for customers on:
Better use of the CRM for managing user permissions to protect against cyber risks like data breaches, as well as for project management to streamline and track enterprise-risk-based initiatives like opening in new territories or product development
Sales pipeline workflow automation to optimize operational efficiency and reduce missed follow-ups and lost opportunities
Employees are a key part of a company’s successful integrated approach to risk management. Support training with a system staff can use to report a potential threat and consider rewarding team members whose actions protect the business.
Download your guide to managing teams and scaling sales
3. When to consider specialist integrated risk management software
While there are dedicated software-based IRM solutions like ServiceNow, small-to-medium-sized businesses can likely operate their plan without one.
Adapting your current hardware and software to monitor for and repel risks might be all you need.
For instance, you can:
Set your CRM to provide you with updated sales performance and customer sentiment reports
Set up an alert in your accounting and invoicing software to ensure customers pay on time, protecting your cash flow
Configure your firewall to look out for and block cyber threats in real time before they get into your IT system
Keep your risk-based documentation and spreadsheets up to date for all threats. Add new threats as they emerge and rank them on your risk matrix to prioritize them accordingly. At each meeting, review how well the company is handling risk analysis and risk response across the company and amend as necessary.
As your business grows, you might require specific apps to manage particular types of risks. However, before you invest in a new tool, consider whether your existing hardware, software and processes can be further adapted to meet your evolving needs.
Integrated risk management FAQs
Final thoughts
A well-implemented integrated risk management system protects your company against the identified risks and prevents them from escalating and impacting your reputation, financial stability and business operations.
Focus your efforts first on the risks most likely to cause loss and disruption. Update your IRM program regularly to reflect current and emerging threats, and involve mid-level managers alongside top management for valuable insights and feedback.
Find out how Pipedrive’s range of features can be part of your solution to protect your company against risk. Register for a 14-day free trial.
