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Perceptual and Cultural Aspects of Risk Management Alignment: a case study

 

 

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Source
Journal of Information System Security
Volume 4, Number 1 (2008)
Pages 320
ISSN 1551-0123
Authors
Corey Hirsch — Henley Management College, UK
Jean-Noël Ezingeard
 — Kingston University
, UK
Publisher
Information Institute Publishing, Washington DC, USA

 

 

Abstract

Understanding how management and functional teams perceive risk, and will decide and act in managing risk, is one cornerstone of an effective enterprise Information Security management strategy. There is evidence in the literature that if managers do not understand the reasons behind an Information Security policy, or do not fully support the rationale behind the strategy, they are unlikely to engage in its development or adhere to it later. Further, if various individuals and management teams in an organisation approach risk management in a non-aligned fashion, their divergent decisions and actions could have the effect of canceling out each other, and rendering the enterprise risk management strategy less effective. Research indicates that a sociological understanding of risk perception as an input to Information Security development is becoming a necessity. We argue this from two strands of literature: the first is the literature in risk assessment in fields other than Information Security. The second strand is the Information Security literature.

How do managers perceive risk in practice? And how might an enterprise foster an aligned approach to risk management? This paper presents the case of LeCroy Corp., a medium size manufacturer of high value electronic testing equipment. We show that whilst there are areas where perceptions toward, and tolerance of, risk are shared within the organization, there are substantial variations between different groups of managers at LeCroy. Groups which routinely work together on information security and risk management related tasks have lower standard deviations in their risk judgments than teams which do not share this working experience, an indication that risk perception alignment is in part a social process. Yet this second group may also have responsibilities that are critical to enterprise risk management. We also find that top executives are “mathematical” in their risk appetite at low and medium stakes, yet highly risk averse when the stakes are higher, such as complete business success or failure, another indication of a social aspect to risk perception and management. The ideal scenario for degree and type of alignment will vary as a function of the type of working team. This case study illustrates one approach for defining and migrating toward a robust enterprise risk culture.

 

 

Keywords

Social Aspects of Information Security, Alignment, Case Study, Risk Management

 

 

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