What are the three tiers of risk management?

The three tiers of risk management—Organizational, Business/Process, and System—represent a structured approach to identifying, assessing, and mitigating risks at varying levels within an organization.

Organizational risk management focuses on the overall enterprise-wide risks that affect the entire organization, including governance, culture, and compliance. This tier ensures that risk management strategies align with the organization’s objectives and policies, thus promoting a robust risk management framework that supports decision-making at senior leadership levels.

The Business/Process tier dives deeper into specific business functions and processes, evaluating risks related to operational efficiency, process integrity, and the effectiveness of internal controls. By addressing risks at this level, organizations can optimize performance and improve resilience against disruptions.

The System tier emphasizes technical and system-specific risks, such as those pertaining to IT infrastructure, applications, and data protection. This tier is crucial in managing vulnerabilities that could lead to data breaches or system failures, thereby safeguarding the organization’s assets and ensuring operational continuity.

Understanding these three tiers provides a comprehensive view of risk management, allowing organizations to implement strategies that are coherent and coordinated across all levels of operations.