Risk Management in ITIL is crucial in jointly generating value in an IT Service Management (ITSM) setting. During service and product delivery, risks can arise in various areas, such as operational, legal, and financial.
In addition to reducing service and product delivery issues, government and regulatory entities may also examine an organization’s risk management policies and responses. Adopting and regulating risk in an ITSM setting is good for business and may also be mandated by regulations.
In the ITIL 4 framework, risk management is considered a general management practice with the dual purpose of ensuring that the organization:
It is important to comprehend the two types of risks.
Your risk profile is managed in order to take advantage of opportunities and improve them, while also reducing, minimizing, or eliminating any potential threats. While many companies concentrate mainly on addressing threats, they overlook the fact that ITIL 4 also concentrates on IT and businesses working together to create value, not just on delivering IT services.
Given this emphasis, I would contend that realizing opportunities in ITIL 4 risk management is just as crucial as preparing for and reacting to actualized dangers.
The ITIL 4 Risk Management procedure consists of four sub-procedures.
The risk management support sub-procedure outlines your risk management framework. This is where the fundamental questions regarding your approach to managing risk are addressed, including:
This sub-procedure outlines the structure in which risk will be managed, not the methods for managing specific risks.
This sub-procedure calculates the impact on the business that would result from actualized risks, and also helps determine the chance or likelihood of risk occurrence.
It’s crucial to assess both the likelihood of a risk occurring and the significance of each risk. Probabilities can be classified simply as low, medium, or high likelihood. Identifying the probability of each risk occurring helps prioritize which risks need response plans and the sequence in which each plan should be created.
Like the Project Management Institute (PMI) guidelines, the primary outcome of the Business Impact and Risk Analysis sub-procedure is the Risk Register, also known as the Risk Log. This document contains a list of recognized risks and the actions to be taken in the event of risk realization.
In this sub-procedure, two crucial items are determined:
The Risk Owner is accountable for identifying any necessary countermeasures and for keeping any countermeasures up-to-date.
In determining countermeasures, we can follow PMI’s approach and define countermeasures that can be taken for positive risks (opportunities) and those that can be taken for negative risks (threats), as shown here:
| COUNTERMEASURES FOR RISK OPPORTUNITIES & THREATS | ||
|---|---|---|
| Countermeasure | Strategy | Risk type |
| Share | Sharing the benefit/responsibility/threat of a risk with another party | Opportunity/Threat |
| Exploit | Acting to ensure that an opportunity occurs | Opportunity |
| Enhance | Increasing the size or capacity of the IT service or product being offered | Opportunity |
| Escalate | Entrusting the risk to someone outside the project, program, or portfolio who can better realize the opportunity | Opportunity |
| Avoid | Avoiding the risk by avoiding the activity that activates the risk | Threat |
| Transfer | Reassigning the risk exposure to a third party, such as an insurance company | Threat |
| Mitigate | Implementing controls and contingencies to reduce the probability or the impact of the risk | Threat |
| Acceptance | For risks that are not covered by other countermeasures, an organization may accept a risk (do nothing) because it is too cumbersome or expensive to control | Threat |
This is where the action is taken when a risk has materialized, and the progress of implemented risk countermeasures is monitored. It’s important to ensure that the response to the risk is commensurate with its impact and to make any necessary adjustments or modifications to the response.
Monitoring may entail modifying countermeasure actions if the actual impact of the risk is greater or less than anticipated. It is also necessary to monitor or report on the efficiency of the planned countermeasure in addressing the risk. Revisiting the other three sub-procedures may also be necessary during risk monitoring, such as:
Risk management is not a solitary or one-time process, it operates within a larger context.
Risk management is an ongoing process that should be regularly assessed or reassessed whenever there is a change within the ITIL 4 Service Value system, especially with regard to changes in opportunities or demand, the Service Value Chain, and other sub-procedures under the General Management, Service Management, and Technology Management practices. The risk management sub-procedures should also be revisited when a new risk is identified during an incident management occurrence.
Since ITIL 4 is a comprehensive framework that emphasizes co-creating business value, not just IT service delivery, the risk management practices can and should be applied to all aspects of ITSM, not just IT service provision.
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