How to Identify an Effective Risk Owner in SMEs?

Managing information security risks is critical for SMEs. If left unchecked, these risks can ultimately lead to legal troubles, financial losses, and reputational damage. In fact, according to Accenture’s Cost of Cybercrime Study, while 43% of cyber attacks target small businesses, only 14% are prepared to defend themselves effectively. This alarming statistic highlights the urgent need for SMEs to protect their critical assets and manage risks effectively.

One key aspect of risk management is assigning a “risk owner.” A well-chosen risk owner ensures that threats and vulnerabilities are dealt with promptly, minimizing their likelihood and impact. However, many SME leaders may struggle with identifying the right person for this role. This article aims to provide practical guidance for SMEs in selecting the right risk owner.

Role of a Risk Owner

A risk owner serves as the single point of accountability in ensuring that threats and vulnerabilities tied to specific assets or processes are managed effectively. They ensure that security risks are identified, assessed, and mitigated in a timely manner. Without someone in this role, risks may go unnoticed or unaddressed, leaving crucial assets/processes exposed to these risks.

A risk owner doesn’t always have to be one individual. In some cases, it could be multiple individuals as well. For example, in an IT department, the Chief Information Officer (CIO) might own the overall responsibility for IT risks, such as cybersecurity breaches, while another team member, like the IT Security Manager, handles the day-to-day risk management tasks such as implementing controls and monitoring systems. In this example, both of them may have a shared ownership of the risk.

However, for better accountability, having one clearly defined individual as the risk owner is often beneficial.

Factors SMEs May Consider When Identifying a Risk Owner

1. Assign People Based on the Nature of the Risk

Start by understanding the type of risk your SME is facing. Risks may be tied to specific processes, assets, or compliance requirements, and the ideal risk owner will vary depending on the context.

Consider the example of employee data handled by the HR department:

1. The HR Manager could be the risk owner when the risks are operational in nature (related to the day-to-day activities), such as unauthorized access or mishandling of records.
2. On the other hand, the Compliance Officer or Risk Manager might be the better choice if the risk is regulatory, such as ensuring compliance with GDPR or similar data protection laws.

2. Select Someone who is Directly Linked to the Asset/Process

Choose someone who is accountable for the asset or process. This is typically someone whose role would be directly impacted if the risk materializes. Such people are likely to be more interested in preventing the risk from happening and is likely to do a better job at it.

For example, the head of finance would be the ideal risk owner for protecting employee financial details. As someone directly accountable, they will be more motivated to mitigate risks, such as unauthorized access.

3. Consider Someone with Basic Security Knowledge or a Strong Interest in Risk Management

If your organization has people with basic knowledge of security practices, they can be a good choice for the role of a risk owner. Their familiarity in these areas provide a solid foundation for understanding and managing information security risks.

However, if there is none with required knowledge, consider selecting people with a strong willingness to learn and a genuine interest in risk management. People with a learning mindset are often more motivated to put in the effort required to learn and understand the nature of risks. This includes identifying risk sources, assessing their potential impacts, and analyzing the operational context in which they exist.

4. Prioritize People with Strong Decision Making Capabilities

The risk owner must possess strong decision-making capabilities. They should be able to assess the risk, recommend appropriate controls, and allocate necessary resources to manage the risk effectively. This ability is crucial, as managing risks often requires quick, sound decisions to minimize potential impacts.

Mid-level managers such as department heads might be ideal for this role. This is because they are already accustomed to making decisions. Their leadership experience also ensures they can confidently take the right actions.

5. Look for People with a Strong Sense of Accountability

A successful risk owner must take full ownership of the risks they manage. They need a strong sense of accountability to ensure that risks are mitigated effectively. This includes owning the decisions they make and accepting responsibility for the outcomes. Clear accountability eliminates confusion, ensures swift decision-making, and encourages the risk owner to stay proactive in managing threats.

The Right Person Makes all the Difference

As an SME leader, identifying and empowering the right person to manage risks is as important as the risk management strategies you plan to implement. A well-chosen risk owner brings focus, accountability, and timely action to the table, ensuring risks are mitigated effectively.

To succeed in this role, risk owners need to be supported with the right training and resources to stay ahead of emerging threats and vulnerabilities.

By involving in their development, you’re not only equipping them to handle risks effectively but also fostering a culture of accountability and resilience within your organization. The time you spend in identifying and supporting the right risk owner will have a lasting impact on your business’s security posture and its overall success.