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Uncertainty. It feels as though a new force emerges every day that creates a little more uncertainty in the world. Riding the waves of insecurity in financial markets, competitive industries, legislative and regulatory environments, and societal shifts has become a major challenge as organizations look to the future. This is the fundamental reason organizations today need to take a deeper look at how risk management is approached and integrated within the business. Risk management must take into consideration where your organization is headed. What decisions are you trying to make to meet your objectives? What questions are you trying to answer? What analysis into possible obstacles can help you choose the right path? These are the primary questions risk analysis seeks to answer. Risk analysis could be just simple, qualitative, rational thinking; it could be in-depth statistics; or it could be anything in between. Whatever is the quickest, the most believable, and the most defensible way to help guide decision-making in solving problems -- that is what risk analysis is all about. Risk quantification represents the next phase in driving greater precision and meaning in discussions risk management teams have with their business partners. There are a number of reasons why risk analysis and risk quantification is increasingly important for your organization: REASON #1: Get the most out of your data. Why would you not want to make the best use of the data you have? If your organization is like most organizations, you have implemented multiple processes to gather risk and compliance data, such as risk assessments, business impact analyses, and compliance reviews. These processes provide tactical views into the state of risk and controls in your environment -- but they can be leveraged for so much more. You can only really express the knowledge in your data if you go down a quantitative path. At the rate data is created within organizations, a rational, intelligent method is required to aggregate and derive meaning from the data. Quantification is the best path to take in making the most of your data. REASON #2: Risk quantification is not as difficult as you may think – and you are probably (almost) already doing it. For many people, risk quantification can sound like a little bit scary, even dreadful proposition. You may think “I am going to have to get a PhD in mathematics to do this.” And traditional risk approaches already seek to answer the same questions: “What are the chances of a risk happening? And how big is the risk likely going to be?” In reality, understanding the basics of probability lays a strong foundation. Plus, you can accomplish a great deal even with very little quantitative information. Quantitative approaches are really about being able to say the thing that you mean. At a very simple level, risk quantification enables probability and impact – traditional inputs to the risk equation – to be expressed in increasingly more precise measures. Leveraging the same knowledge, you already use to select between “low” and “high” levels for risk, risk quantification gives you the ability to be more expressive with numbers, rather than relying on ranges. Risk quantification enables you to use the same qualitative measures -- likelihood and impact – as you are today, with added expression of what you think AND the full benefits of quantification. REASON #3: The benefits of risk quantification are exponential. It is nice to say ‘let's do it’, but on its own, risk quantification is not just about starting to use math. By quantifying things, you can essentially add them up, whereas you cannot add up your reds, oranges, and greens. You can say how many reds, how many oranges, and how many greens. And at what point do those become black? When do we have so many blacks that it causes real concern? If all you have is a list of columns of how many of each, that is not effectively telling you just how much exposure you face. You need to lock into what your total amount of risk looks like. When you want to prepare a meal, you can optimize your grocery shopping efforts by balancing cost and quality. Your shopping list lets you know what to buy from the supermarket; you can compare prices of items in the store; and your store receipt adds up the total cost of your groceries; and We all like that flexibility and predictability. We can do the same thing with risk – if you translate those red/yellow/greens into numbers. Archer Insight Delivers Enterprise-Wide Risk Quantification Archer® Insight is a suite of enterprise-wide risk quantification capabilities designed to deliver risk and business leaders a complete view of enterprise risks to improve resilience and ensure achievement of its strategic goals. For example, Archer Insight allows you to use built-in techniques like Monte Carlo simulation, so you do not need to do all of the modeling yourself. Archer Insight can help you aggregate risk into meaningful quantitative measurements -- and when you can add things, you can compare them. It allows you to compare risks and investments needed to mitigate, reduce, transfer or avoid risk. Archer Insight is entirely quantitative, enabling you to combine all the threats to your organization and truly understand the risks that matter. It makes quantitative risk management quick and easy to use by providing a full set of tools and features for understanding and managing all types of risk in one platform: operational, project, cyber-security, health and safety, investment and cashflow risk. For more information, register for our upcoming " It's Not Just Math: Applying Risk Quantification to Benefit Your Business " webinar at 11:00 am EDT on Thursday, July 2 with Archer's quantitative risk management expert Graeme Keith to learn: How risk quantification fits into your long-term risk management strategy Methods to get moving in the right direction to incrementally bring value to the business through risk management Practical approaches to improve how you communicate risk to leadership Register today to learn more!

Financial services institutions (FSIs) should be taking steps now to build operational resilience, which is the ability of firms, financial market infrastructures and the financial sector to prevent, adapt, respond to, recover, and learn from operational disruption. For the past few years, regulators have been focused on the resilience (or lack thereof) of FSIs and with good reason. The global, regional, and personal impacts created by disruptions to this sector – including financial crises, the COVID-19 pandemic, geopolitical unrest, supply chain issues, competition, technology and cyberattacks – have been consequential. Disruptions have cost organizations billions of dollars and impacted entire regions, countries, and industries. The regulatory guidance in some areas, such as the UK, has been formalized and FSIs doing business there must be taking specific and immediate action now to comply. While regulatory bodies have published guidance providing direction for how and when FSIs must become operationally resilient, compliance requires participation and cooperation across multiple functions of your organization. Establishing a common approach that enables siloed teams to act together to build a resilient organization is a challenge. The regulatory guidance suggests some steps that provide a good foundation. Join our May 10 webinar on, Operational Resilience - What Financial Services Institutions Need to Know Now , where we will talk in more detail about how to: Gain a better understanding of regulatory guidance and what it means for your organization Bring your cross-functional teams together to focus on common goals and approaches to operational resilience Leverage Archer to help you build operational resilience Visit Archer Operational Resilience for more information. Contact us to implement a risk-driven, business-prioritized approach to build an operationally resilient organization.

Leadership takes many forms. We recently celebrated our 20th Anniversary at the Archer Summit 2021 in Orlando , marking a long history of leadership in the GRC and Integrated Risk Management space. That same week, Gartner published the second of its two current Risk Management focused Magic Quadrants for the year (IT Risk Management and IT Vendor Risk Management Tools ) both of which once again recognized Archer as a “Leader.” Both reports mark the 6th consecutive time we’ve been a Leader, and in total their publication marks 24 consecutive times Archer has been a Leader in any of the Magic Quadrants focused on Risk Management. This is obviously an outcome we’re very proud of as a team, and I think reflects on our continued commitment to execution and vision. But as I said, leadership takes many forms. And personally, I’m equally proud of many of the areas we’ve executed against a vision in the past year, many of which were not part of the evaluation criteria for Gartner, but were a primary focus at Archer Summit. Advancing the discussion around quantitative risk analysis beyond Cyber Risk is leadership. We all understand the importance of IT risks (including but not limited to cyber security). And maintaining leadership in these areas is of course an important part of delivering true Integrated Risk Management. But it’s not the only area of risk that organizations need to manage carefully. This is why we launched Archer Insight earlier this year, making us the first of the true IRM providers to extent risk quantification, bowtie and other critical tools for analysis across the full range of risk drivers. Innovating the industry’s leading risk management platform to support broader stakeholder engagement is leadership. One of Archer’s core capabilities that customer praise the most is how the platform supports very deep dives for the core risk manager/risk administrator persona. But we also see how risk, as it expands into new areas of the business, really requires the participation of a wide range of users, including many who will have much less frequent interaction with the platform. Our development of Archer Engage is aimed directly at supporting risk management teams in their efforts to help first line operators, vendors and other stakeholders participate in risk efficiently and effectively. Extending core business continuity and IT risk programs into true Operational Resiliency is leadership. The need for organizations to extend beyond what has all to often been a siloed focus on IT business continuity/disaster recovery is not new. But last year’s pandemic and the shock to the system that caused across all aspects of operations has accelerated for many the need to better prepare of disruptive scenarios. And that disruption isn’t limited to IT delivery and in fact needs to be driven by a broad and prioritized view of how these scenarios that could impact the ability to provide products and services. This is exactly where we’ve gone with the recent launch of Archer Operational Resiliency , combining current regulatory guidance and best practices as a foundation for building operational resilience. Supporting our customers in pursuit of new Board-level strategic imperatives is leadership . From the beginning, risk management was meant to focus on the most critical strategic areas of a business. Continuous waves of regulation drove some to turn focus towards regulatory compliance and audit capabilities, also a core tenant of Integrated Risk Management. But we see Boards and CEO’s increasingly expecting their Risk Management functions to focus more fully on awareness, assessment and response to those risks that threaten overall corporate valuation. Few business trends have taken Board-level discussion by storm the way ESG (Environmental, Social & Governance) has over the past year. This drove the very recent launch of Archer ESG , which we see as an incredibly natural extension of how customers leverage our platform today, providing improved ability to gather, assess and align ESG data with internal plans and external regulations. And most importantly, help organizations gain early visibility into the risks that threaten ESG success. A thanks to the entire Archer Community for all that they’ve done and continue to do to drive us to lead. Many of you have spurred the development that supports our Leadership recognition by Gartner. More still have acted as catalysts in these recent areas of innovation. And finally, a thank you to those from the Archer Community that were able to join us at this year’s Archer Summit, in person or virtually. We look forward to the next year of news and developments from Archer, and sharing those with all of you.

Today we are excited to introduce Archer Insight , a set of quantitative risk analysis capabilities which, when paired with Archer’s industry-leading integrated risk management platform, supports improved risk-based decision making. Archer Insight features a wide range of enhanced risk analysis capabilities; this blog focuses on one feature we expect to be of high interest to risk analysts, specifically improved risk heat maps. Risk heat maps are a basic communication tool for the risk manager, providing a visual overview of the portfolio of identified risks. On one axis is the likelihood of the risk occurring, and on the other axis a measure of the impact should the risk occur. Those risks with the highest likelihood and impact are most threatening and the corresponding quadrant is colored red. Those risks with the lowest likelihood and impact plot in the quadrant colored green to reflect their relative unimportance, and the area in between is typically colored yellow or orange. Traditional heat map Despite its ubiquitous popularity, the traditional risk heat map presents several challenges: Clearly not all squares of the same color represent risks of the same severity, but the qualitative evaluation of likelihood and impact magnitude do not allow a rational method for defining finer gradations along the red-to-green spectrum. Likelihood is typically equated to probability of occurrence for events that can occur at most one time (like the destruction of a building or the loss of a dataset to the Dark Web) or frequency of occurrence for events that can occur multiple time (like fatal accidents, system shutdowns or regulatory fines). The former scales from 0 to 1, while the latter can take any non-negative value. It is therefore very challenging to show both types of likelihood on the same plot. For example, if an expected frequency of five times a year is ‘High’, then to be consistent a probability of 100% would be lower, which does not make intuitive sense. Representing low likelihood risks is also challenging. One might say that a risk with a 10% chance of occurrence should fall into a ‘Low’ category, but this is still quite significant – if you have 10 such risks, it is almost certain that one of them would occur. On the other hand, a risk with a one in a thousand chance of occurring would fall into the same ‘Low’ likelihood category. When an impact can take a wide range of values, it is extremely challenging to decide how to present the risk. For example, a factory accident might have a 10% chance of occurring in a year, but its impact could be anything from some minor bruises if lucky (Low), most probably an outpatient visit by a worker (Medium Low), but in the most extreme circumstances there could be several fatalities (High). If the risk is evaluated as [Likelihood,Impact] = [Low,Medium Low], there is no recognition of the very severe possible outcome, but if it is represented as [Low,High], the evaluation is exaggerated. A new vision for heat maps Archer Insight introduces quantitative estimation of risks through simple, intuitive evaluation techniques that require no expertise on probability modeling or math. It resolves the probability/frequency dilemma, and it allows users to express the range of possible resultant impacts if needed. Archer Insight also introduces quantitative bowtie methods to express how one risk may have more than one consequence. For example, a car crash (risk event) could result in several consequences – from being late for work to repair bills to injuries and fatalities to the passengers and larger public: Bowtie analysis for a car crash These consequences produce impacts of different dimensions: money for repairs, time for delays, and level of injuries/fatalities for people. It is even possible to map several risks to the same consequence. For example, several different risks might all lead to the cancellation of a contract (the consequence) with an important financial impact. Archer Insight automatically calculates the aggregate likelihood of the consequence occurring, taking into account all the different ways it could happen. The option to include a richer description of risk has made it possible to rethink the heat map, and produce new visualization that is more precise, comprehensive, and useful for decision makers. The standard Archer Insight heat map has an impact scale that ranges from ‘Extremely Low’ to ‘Catastrophic’ plus a ‘Nil’ category so that one can represent when the impact of a consequence has been avoided completely. The finer gradation, together with guiding definitions, allows a far more precise evaluation of impact. Moreover, Archer Insight allows you to specify ranges of impacts, both qualitative and quantitative. Its sophisticated algorithm translates these inputs into a consistent scaling system, even across different impact types. The algorithm ensures that all consequences plotting in the same color are equivalent in importance. Archer Insight P-I table for consequences with heat map overlay The vertical axis is numeric, accommodating both probability and frequency, which is automatically adjusted to reflect the business time horizon and any changes in the window of opportunity for the risks to occur. Pre-and post-risk treatment evaluations are shown together using “tadpole tails”: Tadpole tails – the head represents the current status, the end of the tail represents the evaluation prior to any risk treatment This allows the manager to appreciate the level of reliance on the effectiveness of risk management strategies. If the line is long, the reliance is large. The heat map allows you to drill down by selecting a specific entity and a specific type of impact if required. Hovering over a consequence will show a description popup, clicking on the dot will highlight the consequence in the accompanying table, and clicking the table entry will show a wealth of information describing the strategy being used to manage the consequence: Archer Insight P-I table filtered for Reputation consequences with heat map overlay One can also view risk events instead of consequences. Archer Insight then displays each risk event, accounting for the multitude of consequences that might arise from it: Archer Insight P-I table for risk events with heat map overlay switched off To learn more about how Archer Insight is enabling an enhanced level of risk-based decision making , contact us today.

The world as we know it is dynamic, and the global pandemic has emphasized the fragility of human and organizational operations in the connected world of today. Companies are not only trying to recover from the drastic changes of the pandemic, such as remote work, but from the impact of the shifting risk landscape and how it has affected their business goals and outcomes. With an eye on the importance of riding the waves of disruptions and change we see today, organizations need to achieve operational resilience to survive. Operational resilience is the ability of an organization to absorb and adapt from any threat or unplanned disruption. It is a coordinated, consistent, and automated approach to business continuity that goes beyond recovery of internal processes to focus on external services and product delivery. Operational resilience includes traditional elements of IT disaster recovery, planning, testing, and execution, that allows for a swift response during crises to protect an organization’s ongoing operations but takes steps closer to the overall business objectives and strategies. An organization that takes time to construct a solid risk management strategy will thrive in this age where business risk is increasingly connected. Therefore, integrated risk management is the foundation for operational resilience. An organization that has achieved operational resilience will continue to function properly and achieve its goals even amidst interruptions. While the burden of resiliency is one that every employee should carry, senior management should focus on assessing and understanding the risk levels of the organization and its readiness for disasters and unexpected scenarios. Gartner predicts that by 2025, “70% of CEOs will mandate a culture of operational resiliency to survive coinciding threats from COVID-19, cybercrime, severe weather events, civil unrest, and political instabilities.”i Our whitepaper, “ The State of Integrated Risk Management ” discusses the importance of resiliency starting top-down from leadership. Communicating Operational Resilience in Your Organization To effectively and optimally manage risks, organizations must adopt a holistic approach to overseeing every aspect of the multiple risk management functions. Usually, organizations carry out risk management in silos; each department deals with its own risk management and possible disruptive scenarios. Occasionally effective, this method is not ideal for companies that seek to thrive in the long run, especially in their digital transformation efforts. The silo method does not take into account the risk assessment of the company as a whole. Any risk assessment done in any sector is only as effective as that sector deems fit. Uncoordinated, ad hoc processes can leave a business vulnerable and recovery plans ineffective. Operational resilience deals with assessing and understanding the risk tolerance levels in every sector - to proactively manage risks throughout the organization. Resilient organizations look at both internal and external risks as they understand that risk can also originate from third parties. They have risk management plans in place for any disruption, whether cyberattack, natural disaster, or global pandemic. Companies with operational resilience also must consider risks beyond their own four walls. They know that good communication is imperative to coordination. When a disruption or threat arises, senior managers must convey information to every party involved, including disaster recovery and crisis teams and, if necessary, consumers. Internal and external communications are incredibly important in risk management to reduce impact and maintain business continuity. An organizations’ resilience can be improved by ensuring visibility and communication with the following: Clients Stakeholders Distributors Vendors Suppliers Partners And every other set of persons that can have an impact on the organization. Interdepartmental communication is crucial to the success of shifting from a reactive to a proactive risk management structure. Operational resilience is a cultural mindset change that drives the implementation of resilient practices throughout the business. How to Embed Operational Resilience in an Organization There are some integral steps that organizations must adopt to transform from recovery to operational resilience. Adopt a Holistic Perspective to Viewing Organizational Risks Organizations should consider both internal and external factors that can have a direct or indirect impact on the organization. Take into consideration the people, technology, programs, and processes, etc. associated with the business. An effective enterprise risk analysis must consider risks across every sector and division of the organization. This strategy enables employees and teams to come together to envision potential disruption scenarios that may arise. Design a Comprehensive Risk Assessment System. To manage risks, organizations must be able to access and predict possible risks scenarios. This is where communication plays a major role, as everyone in the organization must be informed about evolving business priorities that inform recovery and response processes. When members of the organization are on the same page, potential threats and interruptions can be properly analyzed, understood, and documented. Consider the upstream and downstream dependencies, systems, and processes, and how your team plans for them. Identify Possible Failures in Existing Processes and Remedy Them While every failure that may arise from existing processes may not need to be documented, it is critical to identify key scenarios and focus on the capabilities that prepare for those specific scenarios AND related, derivative, or similar situations. Assess different threats levels and types to proactively plan against them. An effective program must include a cycle for learning and improving processes, so it’s important to bring the continuity and recovery professionals managing day-to-day incidents or planning and testing for crisis events together, Operational Resilience and The State of Integrated Risk Management We want companies like you to benefit from the risk management lessons learned by our customers during the height of the global pandemic. In our State of Integrated Risk Management report, we outline the key discoveries and insights garnered from those who thrived despite the worldwide upheaval. Get the whitepaper now to read more about the four themes affecting organizations today, and how your business can benefit from an integrated risk management strategy focused on resiliency. Archer’s Business Resiliency Solution At Archer, we can help you scale through uncertainties and digitally transform your business to the next level through strategic decision-making. Contact us today to discover how to improve your organization’s operational resilience to make your company better suited to handle risks, improve business outcomes, and ease your digital transformation process, especially during times of disruption. i Gartner: Predicts 2021: Operational resiliency. January 2021.

Archer has always believed that risk management requires broad participation to be fully effective. Modern enterprises are diverse, distributed, and dynamic. Risk management and compliance teams facilitate, educate, and monitor. Risks and controls are owned by operational leaders far and wide and are far too numerous to centralize. They are as diverse and dynamic as the business itself. Risk management programs must rely on input from these operational leaders across the organization to realize its potential. Traditional risk management software has been tailored to the needs of risk management and compliance teams. No platform offers this group more capability and out of the box industry knowledge than Archer. But risk owners aren’t looking for robust workflows and flexible data models. They’re looking for ease and speed. They’re looking for risk management to meet them wherever they might be with the seamless delivery of the cloud and on whatever device they’re using. In short, they’re looking for risk management to enable them to do their job, not distract them from it. That’s why we invested so much in enhancing Archer’s user experience and in expanding our mobile applications in recent years. It’s also why we launched Vendor Portal last year. But as we continued to develop and evolve our ethnography of key stakeholders and contributors outside of the risk management program – risk owners, third parties, and executive leadership – the more we were drawn to the conclusion that this group has needs of their software separate from those of risk management professionals. And that led us to Archer Engage: a mobile-first, cloud-native compliment to the Archer platform that’s meant to carry risk management from operational managers to the board of directors. Archer Engage is an expansion of what we began last year with Vendor Portal, now known as Archer Engage for Vendors. It integrates with your Archer instance – be it SaaS or on-prem – to present your assessments and other information requests in a fast, responsive application that’s as easy to use on your smart phone as it is on your company-issued laptop. And as 2021 unfolds you’ll see us add capabilities for content creation, data driven events, and advanced workflows to bring the richness of all your Archer applications to the convenience of Archer Engage. Archer Engage has the same great security posture as Archer SaaS and is resilient enough to continue to operate even when your Archer instance is unreachable. The Archer team has been hard at work to reach this milestone; we are proud to announce that the first release of Archer Engage for Business Users will be generally available to all Archer customers on May 5th, 2021. To learn more about Archer Engage , visit ArcherIRM.com/engage , read the press release introducing Archer Engage , or contact your Archer Account Executive .

Staying on top of the myriad of risks coming at your organization can be a herculean task, but when combined with risks from third parties it can be overwhelming. You have some control over your own risks, but much less control over third-party risks, not to mention risks from their third parties (4th, 5th, Nth parties). There’s only so much you can do, but what you can do is strengthen your own resilience by implementing preventive measures, processes, and controls so you can focus on mitigating the residual impacts your third parties can have on your organization. If you don’t know where to start, I recommend the following areas: Identify critical third parties that support your business . This might require taking a step back to understand which externally provided products and services are the most important. “Important” should be defined as those products and services that generate the most revenue for your company, that have the greatest impact on your reputation or compliance, or that are important by other business metrics. Once you know what your most important products and services are then you can identify and associate those third parties that support your most important products and services. An organization might use many third parties, but the focus needs to be placed on those that are most critical to your organization. Map the interdependencies between third parties and your organization . Third parties are an extension of your organization in the work they do, so a critical next step is understanding the interdependencies between your business and these third parties – which systems do they support, as with a cloud service provider. Which third parties provides critical raw materials ? Or which third parties support your employees. This is critical because as you focus on building operational resilience across your internal “pillars” (business processes, IT infrastructure, facilities, and people) you have a better idea which third parties support each pillar. Your interdependence should also be measured against the level of reliance on each third party, which is particularly important if that third party is the only supplier for a particular input to your business, or that supports a key business process. Understand third-party risks and how they can impact your organization . No longer can you assume that because you have a contract with a third party that they are mitigating risks that may be passed to your organization. You must identify, assess, and mitigate third-party risks that could impact your organization. One way to do this is to work with your third parties to see their risk registers and understand how they’re treating the risks and what the impacts could be to your organization. If they won’t share the information yet they’re a public company, they you might have a bigger problem, but you can always obtain their 10K/Qs and review risk factors in those reports. Another way is to discuss with your third parties which risks have resulted in actual losses, or other risks they have identified and the probability of their occurrence, and other factors to understand how likely they are to affect you. Include appropriate risks in your risk register and treat the risk to your organization accordingly. As part of this step, you must compare the residual risks that could impact your organization to your defined impact tolerances.. If the impacts exceed your defined tolerances, then you should address and mitigate the risks. Address the most important risks from your third parties that could impact your organization, be flexible to pivot to different risks when you need to, and ensure your response is commensurate to the risk and reward. Create visibility through data and insights . Good insights give you the visibility you need to manage the risks and take advantage of the rewards of working with your third parties. Insights come from tracking and measuring quantifiable resilience, performance, and risk metrics. Using balanced dashboards that give executives, program owners, business owners and others the data they need to make decisions and take action. You must be able to make agile decisions in real time to mitigate risk or take advantage of it. Third parties are a critical part of doing business and sometimes they bring risk to your organization. By considering the topics above, you’ll be better able to convert your third parties from a risk factor to a strategic advantage. For more information, visit Archer Operational Resilience . Contact us to learn how Archer can help you build resilience against third-party risks

You know the ‘Death and taxes’ phase? This is the full quote, from a letter Benjamin Franklin wrote in 1789 to Jean-Baptiste Le Roy – a French fellow tech guru and scientist of the time: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain , except death and taxes.” How many infomercial articles have you read that start "In today's world, [blah blah blah] is more important than ever"? So trite. So, let me change things a bit: “In today's world, we still live with enormous uncertainty and using numbers to effectively manage risk is just as important as it has always been.” After a hiatus of twenty years (this July) of genuflection to SOX, the risk management world is beginning to remember numbers again. Beginning to remember that taking the right risks for the right reasons is an essential part of progress, of success, of creating value. It’s what risk management is meant to do and the secret sauce in rational risk-based decision-making is numbers . Boxes of long-forgotten ideas are being taken down from the attics of veteran risk analysts, the dust of sorry neglect blown away, and carefully opened – with a mixture of curiosity , expectation and trepidation . Inside we find a mysterious collection of tools that have lost none of their lustrous sheen with age. In fact, in today’s world, with the greater access to data and computing power, they offer more potential than ever. If only we’d learned how they work. We should be kicking ourselves that we were so collectively neglectful. Luckily there are lots of grey beards like me, raised in the pre-SOX era, who have kept the secrets alive. Luckier still, Archer has decided to add the full might of risk quantification to our GRC/IRM platform . It’s called Archer Insight and its awesome. I think Benjamin Franklin would have approved. About that mixture of curiosity , expectation and trepidation … Curiosity: what nuggets lie hidden in your data It takes time, care, effort and money to collect data. Your organization has lots of it. If you’ve been using Archer for any length of time you will lots and lots of risk-related data, all beautifully organized and safe. Don’t you wonder what those data might be able to tell you? One of the most common areas in which an organization can dramatically improve is to make use of the data it already collects. Risk management is no different. The discipline that turns data into knowledge is quantitative. Knowing how often your controls have failed helps you estimate their probability of success. Looking at how many of your historic risks actually occurred helps you see how much you over- or underestimate their likelihood. Looking at best and worst case scenarios helps you estimate the range and likely impacts. The list goes on and on. Expectation: will it really help our business? Yes, it will. It will help you manage risks far more cost-effectively simply because you can compare the size of a risk against the costs of different treatment options and pick the option that gives you the greatest bang for your buck. But it also means you can aggregate. Numbers can be added, risk scores cannot. Aggregation allows decision-makers to see the big picture, and that is an essential part of making the right big decisions. Trepidation: You never understood statistics and probability theory Don’t’ worry about that. For many people, when they hear the phrase “risk quantification” they think of their less-than-rewarding experience with statistics classes at university. They understand that probability theory can only be wielded safely by socially-awkward, sartorially-challenged, wild-haired geniuses working feverishly on equations nobody else can understand. To be fair, they do exist – but their natural habitats are academia and perhaps SpaceX, and some of them look like you and me too. We focus a bit too much on that Einstein photo. In the business world, the challenge is figuring out the best strategies for handling risk, not the math. The people who know the business and have a pragmatic, problem-solving head on their shoulders are best-placed to figure out these strategies. Perhaps that’s what you do already. Framed properly, the method used to evaluate risk can make it really simple to provide the right numbers. Archer Insight is set up this way and it builds the risk analysis models for you as you describe the problem. You don’t ever need to pick a probability distribution or write an equation. But it’s still a great idea to know the basics of probability. You’ll be more confident about explaining what’s been learned, checking the results and collecting the right data. It will take a couple of days of training, and Archer can provide that training. You might even find it fun. Archer Insight Delivers Enterprise-Wide Risk Quantification Archer® Insight is a suite of enterprise-wide risk quantification capabilities designed to deliver risk and business leaders a complete view of enterprise risks to improve resilience and ensure achievement of its strategic goals. For example, Archer Insight allows you to use built-in techniques like Monte Carlo simulation so you do not need to do all of the modeling yourself. Archer Insight can help you aggregate risk into meaningful quantitative measurements - and when you can add things, you can compare them. It allows you to compare risks and investments needed to mitigate, reduce, transfer or avoid risk. Archer Insight is entirely quantitative, enabling you to combine all the threats to your organization and truly understand the risks that matter. It makes quantitative risk management quick and easy to use by providing a full set of tools and features for understanding and managing all types of risk in one platform: operational, project, cyber-security, health and safety, investment and cashflow risk. Join us for an upcoming webinar Risk Quantification: Step Up Your GRC Game to learn more about how you can quantifying risk can change the conversation with your management team and business partners. Contact us to learn how Archer Insight can help you quantify your risk management .

As new technologies are rapidly adopted, new opportunities open. At the same time technology also carries the burden of potential negative events. In addition, evolving regulatory environments add new compliance requirements, making the task of managing and mitigating risk ever-expanding. We wanted to know how the organizations are contending with digital risk management maturation, so we analyzed how our customers are dealing with evolving risks. We observed the majority felt that their organizations were able to manage at least some of their new, existing, and developing digital risks – in large part because of their path towards an integrated risk management strategy. This is a promising start and shows that even when facing unprecedented challenges, the road to maturing an integrated risk management program leads to not only reduced risk but more agile and informed business decisions Reaching a high level of maturity with integrated risk management can benefit an organization greatly. Managing a greater variety of risks across domains, and smaller categories of risk within domains are part of a maturing integrated risk management strategy. Maturity also means finding better ways for a risk management program’s findings to be communicated within a department or organization. Discover if your organization is making the right moves to mature your risk management program to guard against expanding risk by reading our report “ The State of Integrated Risk Management .” Creating a Culture of Integrated Risk Management A risk management department doesn’t absolve stakeholders from managing the risk in their domains. In the same way that compliance is the responsibility of every person in an organization, integrated risk management strategies place risk reporting and mitigation in everyone’s hands. Today's challenges require managing a cultural shift from reactively checking boxes in a risk assessment program to a proactive risk management model that necessitates participation across the organization. Integrated risk management is a journey - not a destination. Even organizations with well-structured programs must continually monitor and evolve their program to ensure risk management is connected to business goals with cross-functional processes. Risk management processes and procedures that become fixed and no longer connect with the conditions on the ground can create more issues than they solve. When engaging front-line stakeholders, it is crucially important to ensure that when personnel report on evolving risks, that information is at the very least acknowledged and, ideally, acted on by the organization. In years past this would require taking time to fill out paperwork, something that might not always be practical if the front line is a warehouse or industrial site. The ubiquity of smartphones and wireless networks has created a powerful and rapid method to tighten the loop on reporting, monitoring, and communicating sources of risk. We developed Archer Engage to offer a straightforward risk analysis and treatment platform that allows any stakeholder with a smartphone to report and collect risk data in real-time . The process of engagement can extend to third parties as well. An understanding of the relationships you have with third parties to mitigate risk is key to managing risk and operational resiliency. Engaging a third party to report conditions in real-time helps make the priorities of an organization clear. How Risk Management Matures When an organization begins to develop an integrated risk management program, it is useful to focus on quick wins within the context of a broader strategy. This helps to establish that an integrated risk management program is effective and can deliver on the organization’s strategic goals. Risk is changing so dramatically across so many areas that siloed and manual processes make it difficult to get complete information to stakeholders quickly. Even the most successful point solutions will only magnify this challenge, with information stored in different locations and used in different ways by each department. As an integrated risk management approach matures, risk from multiple domains can be managed centrally, in a coordinated and consistent way. In fact, almost 80% of our customers manage multiple domains of risk on Archer. Expanding an integrated risk management program across and within domains doesn’t just mean taking the same cookie-cutter solution and thoughtlessly applying it. The process of expansion should be sensitive to what is novel about the different domains being managed. There is no guarantee that, for example, the threat of a cyberattack will map directly onto a compliance issue, so procedures to mitigate or manage one may not make sense for the other. However, even when the details differ, the platform on which those procedures are developed and deployed should offer a common interface for managing both. It is important to keep in mind that a mature integrated risk management approach will evolve over time. Steps that are taken to increase maturity will not deliver a final product, destination, or steady-state of risk management. Stakeholders in an organization need to understand that integrated risk management means constant vigilance for existing and novel risks to increase operational resilience. Mature integrated risk management is woven into everything an organization does. Think of how ubiquitous the use of digital technology is in a modern organization and you can start to get an idea of how deeply integrated mature risk management should be. Expanding and Extending Risk Management Strategies With a mature risk management strategy, risk is not a ‘black box’ but a key input into making decisions to exploit business opportunity. If your organization can successfully manage disruptions that sideline other players in the field, those disruptions become a chance to grow. Effective risk management is more than avoiding major failures and business disruptions. Creating a culture of risk awareness can protect your organization and enhance its value. An organization with a mature integrated risk management process that can maintain operations during a crisis is able to take advantage of the new opportunities the changing landscape offers. For example, Home Depot proactively distributes plywood, generators, and equipment to clear fallen trees to stores where hurricanes are expected to make landfall. While other hardware and lumber stores may struggle to meet demand or even stay open, Home Depot is the go-to business for people preparing for or recovering from a disaster (1). The individual components of mature integrated risk management are themselves beneficial to an organization. For example, organizations that engage front-line stakeholders in the risk management process were more likely to experience revenue growth and were faster to recover from disruptions (2). Make your organization more competitive and resilient by downloading our report, “The State of Integrated Risk Management ,” which will teach you how the journey toward mature integrated risk management actually provides tangible benefits and better business outcomes. (1) https://fortune.com/2017/08/31/home-depot-hurricane-harvey-damage-impact/ (2) PricewaterhouseCoopers. Risk in Review: Managing Risk from the Front Line Correlates to Higher Revenue and Profit Growth, Says PwC. 2017. https://www.pwc.com/us/en/press-releases/2017/risk-in-review-managing-risk-from-the-front-line.html

Modern organizations must contend with risk from many different sources. Disruptions can come from internal sources, such as process interruptions, accidental damage to physical operations, or a myriad of other potential problems. Even an organization that manages internal risks well will likely encounter difficulties from external sources. Gartner predicts that by 2025, “70% of CEOs will mandate a culture of operational resiliency to survive coinciding threats from COVID-19, cybercrime, severe weather events, civil unrest, and political instabilities.”(1) We also saw evidence of the shift in risk profiles. Over 75% of respondents to our 2020 RSA Digital Risk Survey expected the risk profile of their organization to expand over the next two years. Only 7% of those surveyed anticipated a shrinking risk profile. Based on these changes, we analyzed Archer’s customer base consisting of a wide variety of organizations about risk challenges they faced over the last year , and outline the insights and lessons learned in our whitepaper, “ The State of Integrated Risk Management ”. How Qualitative Methods Fall Flat When Sizing up Risk One major observation we noted was the need for more precise measurement of risk. Qualitative risk analysis can provide a framework for thinking about individual threats or issues. A qualitative assessment can translate jargon like “supply-chain software update attack” into an appropriately category with an eye catching term like “critical threat”. It is important to make sure the relevant parties are aware of how dire the outcomes could be, even when a risk sounds unlikely or outside of a stakeholder’s domain. Due to the wide-ranging nature of threats and disruptions in modern organizations, qualitative visual aids may still be useful when utilized with other measurement approaches. A heatmap that compares the likelihood of a given event to the consequences of said event can give a good idea of which issues are mission-critical but doesn’t necessarily offer a means of figuring out how much overhead should be devoted to mitigating those risks. Replacing words like “mildly adverse” and “catastrophic” with green-yellow and dark red squares doesn’t get around the fact that ultimately a heatmap represents qualitative judgments. This might be a great tool for getting the attention of stakeholders , but real operational impacts will be felt in dollars and cents, not shades of red. The colors of a risk heat map give a false impression of hard data without offering concrete guidance. Why Quantitative Methods Make for Better Risk Management With so many different types of risk from so many sources with widely varying likelihoods, organizations need better ways to manage potential risk. Qualitative descriptions of risk using words and colors require human interpretation when implementing risk management processes, which can lead to inconsistent practices. It also clouds the picture when aggregating risks – what do two reds equal, or 5 yellows? This is why quantitative risk assessment is so important for risk management. Assigning hard numbers to both the likelihood of a given threat and the consequence of said threat provides several advantages over qualitative assessments. Being able to say an event has a 15% chance of taking 90% of an organization’s operational capacity offline in a given year makes it easier to figure out how much time and money should be spent mitigating that risk. Having hard numbers on eventualities also allows for risk assessment across domains. What may count as a catastrophe for one department may not have a very large operational effect. Conversely, creeping normalcy can lead stakeholders to become so accustomed to operating under what has been termed “unacceptable” risks that the term loses all meaning. The numbers placed on risk by a quantitative approach can not only be compared directly but combined so that multidimensional risks can be translated into an easily understood number. Quantitative analysis can capture the probability and effects of a dozen low likelihood, low impact events happening simultaneously. The cascade of disruptions from COVID-19 should serve as a stark reminder that risk is increasingly hyperconnected. Managing the Data of Quantitative Risk Management We recommend organizations manage risk by coordinating efforts across organizational domains, such as resiliency, audit, compliance, IT, and operational ris k. Archer provides a way to coordinate efforts between departments , just like quantitative risk anal ysis provides a common language between departments to communicate risk. Organizations that have established programs in individual domains should be working to expand their risk focus and improve visibility, analysis, and metrics​. Finding common processes or data to share is a great first step to bring together risk management functions. Quantitative risk analysis produces hard numbers that can guide decision-making in definite ways but can also produce a large amount of information. Real-time monitoring of evolving operational risk produces a flood of information. Risk is changing so dramatically across so many areas that siloed and manual processes make it difficult to get complete information to stakeholders quickly. Even the most successful point solutions will only magnify this challenge, with information stored in different locations and used in different ways by each department. This is exactly why our customers see such value in managing multiple dimensions of risk on one platform . Almost 80% of our customers manage multiple domains of risk on Archer . Of the 250+ customers that have been with Archer for over a decade, almost 60% have branched into three or more domains of risk management. Measuring Risk in an Evolving Threat Landscape The past year has shown just how quickly the risk environment can shift. Disruptions due to the effects of COVID-19, the wide variety of regulatory responses even within a single country, and the rapid transition to a fully remote workforce caught many organizations off guard. 2020 was a wake-up call for many organizations, leading to a growing recognition of the need for integrated risk management. When respondents to our 2020 Digital Risk Survey were asked about the need to coordinate risk management, the “extremely coordinated” response jumped more than 90% in the short time between the question being asked in a 2019 survey and the 2020 survey. Get our key insights on quantifying risk and how best to prepare your organization for expanding risk profiles in our whitepaper, “ The State of Integrated Risk Management .” (1) Gartner: Predicts 2021: Operational resiliency. January 2021.

The last two years have thrust many organizations into a series of concurrent and overlapping crises and escalating risk. The direct effects of workplace shutdowns are still being felt with supply chain disruptions, shortages, and permanent closures of vendors that have gone out of business. Cyberattacks of enormous scale and sophistication shut down gas pipelines and even breached departments of the U.S. federal government. For any organization that hadn’t considered the evolution of digital risk due to workplace disruption as an important part of risk profile, the pandemic was a wake-up call. The speed with which digital risks expanded as organizations went remote was unprecedented. Reports of a new respiratory illness were barely newsworthy in early January of 2020. Some organizations had already begun voluntary suspension of in-person operations before official lockdown mandates were declared. Organizations that had relevant continuity plans implemented them, others scrambled to put together ad hoc fixes for unprecedented challenges. The transition to fully remote work brought with it new types of risk. Sensitive information was being routinely accessed from home networks, and the chances of a data breach or other IT threats went up. To see how the most resilient organizations not only navigated this change, but thrived during this disruption, read our whitepaper , “ The State of Integrated Risk Management ”. The Pandemic Accelerated Existing Trends in Digital Initiatives and Risk Even before the pandemic, we found that a full 90% of respondents in our Digital Risk Survey felt that overall, their organization’s risk profile had expanded in the two years preceding 2019. Almost half of the respondents expected their risk profiles to expand significantly in the next two years (1). Our whitepaper, “ The State of Integrated Risk Management ” details how the pandemic reinforced trends of already expanding risk profiles. For organizations that had already made the transition to a distributed model prior to the workplace shutdowns required to stop the spread of COVID-19, there were fewer novel challenges. For nearly everyone else, the last two years expanded the risk profile immensely. Only 2% of the organizations we’ve analyzed claimed that their digital risks had not been impacted by the pandemic (2). Many organizations were faced with hard choices during the COVID-19 shutdowns. Workplaces could either become partially remote, fully remote or suspend operations entirely. Our findings revealed that in the previous two years, less than half of respondents’ organizations had begun to enable a “work anywhere” or dynamic workforce. More than three out of four respondents felt that in the next two years their organizations were going to accelerate their efforts to allow personnel to “work anywhere”. Rapid Acceleration Introduces Novel Digital Risk Organizations were forced to accelerate digital initiatives under the threat of a global pandemic. Almost one in five respondents in the RSA Digital Risk Survey felt that their organization was mostly reactive to digital threats. Digital initiatives bring with them the expansion of what is known as the “attack surface” of an organization. Moving data to the cloud requires storing sensitive information with third parties, which may introduce or increase the risk of a data breach. When moved to the cloud, data that may have previously been “air-gapped” or stored on machines rather than the internet to prevent a cyberattack, is now open to increasingly sophisticated hacking. The challenge and cost of provisioning and securing devices as well as installing and updating software has led many organizations to move more and more systems to the cloud. As organizations onboard and secure more and more remote devices and users, cloud infrastructure and bandwidth have had to increase as well. Software as a service often requires little more than a web browser to offer state-of-the-art digital tools. This also introduces risk, as with every username and password created to access a service, there is another opportunity for a cyberattack. The risks associated with moving toward a dynamic or “work anywhere” workforce were already being considered by organizations when we conducted our 2019 survey. In our 2019 survey, we found that the risks associated with transitioning to a dynamic or “work anywhere” workforce were ranked as the second-highest source of digital risk. How Integrated Risk Management Helps Digital Transformation ​​If an organization adds a new method, process, or platform for every source of risk, it can be difficult if not impossible to quickly assess how a risk profile is changing. Risk management should work with the goals of an organization. We recommend organizations merge essential capabilities across disaster recovery, data backup and recovery, business continuity, crisis management and security incident response strategies, and programs. Organizations accelerate their digital initiatives to become more efficient, increase operational resilience, and be more effective overall at achieving their mission. If new risks aren’t proactively planned for, organizations could end up opening themselves to other threats that overwhelm the expected benefits of the digital transformation. Effective risk management is more than avoiding major failures and business disruptions. Creating a culture of operational resilience through integrated risk management can protect your organization and enhance business outcomes. When integrated risk management is a part of the culture of an organization, the digital transformation is viewed as another component that, like all tools and processes, carries risk. The pandemic expanded and accelerated existing trends, but did so at a pace that caught some organizations by surprise. Based on an amalgamation of inputs from analyzing our customer implementations and our 20+ years of industry leadership we’ve outlined how top organizations have successfully navigated the changing risk landscape in our “ The State of Integrated Risk Management ”. Download our whitepaper now to get a better sense of whether your organization is playing catch up, middle of the road, or ahead of the curve with operational resilience and integrated risk management . (1) RSA Digital Risk Report (2019) (2) RSA Digital Risk Report Third Edition

The walls between digital and information technology risk and physical operations are dissolving. It is hard, if not impossible, to think of a single domain in which information technology has no effect on operations. Even with physical operations, new IoT technology takes previously offline infrastructure and firmly connects it to both the benefits and dangers of the internet. Without a responsive IT risk management system in place, the danger posed by exposing so many assets to the web can be catastrophic. Monitoring IT risk and having insight into how the various parts of an organization’s IT systems are connected is critical to operational resilience. For example, the Colonial Pipeline ransomware attack did not directly affect the function of the pipeline. However, the company that operates the pipeline decided that until the extent of the cyberattack was known, the best course of action was to suspend pipeline operations. Events like the Colonial Pipeline attack, as well as the global shutdowns due to the pandemic, have shifted thinking about IT and digital risk. Through our experience as industry leaders and our analysis of Archer customers in our 2020 Digital Risk survey, we found that nearly 75% of respondents expected their digital initiatives to accelerate due to the disruptions and shifts of the past year. To get key learnings on the convergence of digital and traditional risk, read our whitepaper “ The State of Integrated Risk Management ”. The Current State of IT Compliance IT security and compliance is often tied to IT risk management. In some cases, IT compliance helps with security like using NIST 800 standards when creating passwords. By complying with the strict NIST 800 standards for employee passwords, the risk of unauthorized access is mitigated. There are other situations where an IT compliance solution does not offer any sort of risk management. Many IT systems utilize software and systems that can track issues through tickets, allowing for close monitoring of how problems are resolved. An IT ticket management system provides greater accountability for IT departments, but an IT ticket system needs to be tied to an integrated risk management platform to provide the greatest benefits to operational resilience. There are many major information technology compliance standards published by private companies, non-governmental organizations, and governmental departments. Whether complying with COBIT, ISO 27000, or the European Union’s GDPR (1) , IT compliance on the Archer platform works seamlessly with IT security and risk management. Of the 1100+ deployments Archer has for IT and security risk management , more than 80% utilize compliance processes on the Archer platform. Properly securing internal, third-party, or customer data not only increases operational resilience, but is becoming central to IT compliance. Many IT compliance standards provide strict guidelines and requirements for the collection and storage of personal data, and there are governmental regulations either already enacted or set to take effect that mandate higher data privacy standards. It’s projected that 65% of the world’s population will have its personal information covered under a privacy regulation by 2023, up from just 10% in December 2020 (2). Third-Party Regulations and IT Risk Regulators increasingly require organizations to perform extensive due diligence both when selecting a third party for a service, and the duration of the engagement with the third party. Treating the activities of third parties as an extension of the organization retaining their services is not only required in many jurisdictions, but for information technology services it is sound practice to mitigate risk. The nature of information technology security issues makes third-party compliance particularly important. With physical goods or services, if a third party fails to properly secure their infrastructure, the damage or disruption to operations can be relatively easy to contain. A damaged or stolen shipment of goods could result in reduced capacity to operate but pales in comparison to the kind of disruption information technology security lapses can cause. An IT security lapse by a third party can result in a cascade of IT systems being compromised. For example, no matter how conscientious the tens of thousands of organizations that used SolarWinds Orion software to manage their information technology stack were with IT security, they were susceptible to risk related to the SolarWinds’ security breach. What Organizations Should Expect from their IT and Security Risk Management Vendors More than 70% of Archer customers’ early-stage deployments target IT and security risk management use cases, reflecting the criticality of digital technology and data in achieving their business objectives, which is no surprise given RSA’s reputation for IT security. Risk between departments has become more tightly linked as digital transformation has allowed more and more operations to be controlled with the same systems. The digital transformation that has merged physical operations with information technology is driving the need for greater integration. Ideally, IT and security risks should be managed with the same tools used to manage other forms of risk. An IT and security risk management tool should be able to handle as many risk domains as your organization has to deal with. Most Archer customers don’t stop with one domain of risk, almost 80% of our customers manage multiple domains of risk on the Archer platform . An IT and security risk management solution should offer real-time monitoring and reporting. The speed with which an attack or breach can compromise IT systems means that organizations need to be able to flag and monitor issues in real-time. Real-time monitoring tightens the loop, making it easier to address IT security and compliance issues before they become larger problems. But cyber attacks are only one part of the IT risk puzzle. Third party risk, resiliency, continuity and disaster recovery, compliance and a whole host of other risk categories affect an organization's overall technology risk profile. Organizations should be using a risk management platform that allows for multiple risk domains to be tracked and managed with real-time reporting . An IT security and integrated risk management platform should drive operational resilience and growth. See how the right IT security risk management tools are protecting organizations and helping them expand in our industry report, “The State of Integrated Risk Management. ” (1) https://www.rsa.com/en-us/solutions/advance-gdpr-and-privacy-compliance (2) Focal Point Insights. Nine Data Privacy Trends to Watch in 2021. December 2020. https://blog.focal-point.com/the-9-data-privacy-trends-to-watch-out-for-in-2021