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Risk transfer means that some or all of the risk is being transferred to some external entity, such as an insurance company or business partner When an organization purchases an insurance policy to protect an asset against damage or loss, the insurance company is assuming part of the risk in exchange for payment of insurance premiums
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In risk avoidance, the organization abandons the activity altogether, effectively taking the asset out of service so that the threat is no longer a threat NOTE Organizations do not often back away completely from an activity because of identified risks Generally this avenue is taken when the risk of loss is great and when the perceived probability of occurrence is high
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Risk acceptance occurs when management is willing to accept an identified risk as-is, with no effort taken to reduce it
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Residual risk is the risk that is left over from the original risk, after some of the risk has been removed through mitigation or transfer For instance, if a particular threat had a probability of 10 percent before risk treatment and 1 percent after risk treatment, the residual risk is that 1 percent left over This is best illustrated by the following formula: Original Risk Mitigated Risk Transferred Risk = Residual Risk
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NOTE It is unusual for risk treatment to eliminate risk altogether; rather, various controls are implemented that remove some of the risk Often, management implicitly accepts the leftover risk; however, it s a good idea to make that acceptance of residual risk more formal by documenting the acceptance in a risk management log or a decision log
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IT Management Practices
The primary services in the IT organization typically are development, operations, and support These primary activities require the support of a second layer of activities that together support the delivery of primary IT services to the organization The second layer of IT management practices consists of Personnel management Sourcing Change management Financial management Quality management Security management Performance and capacity management Some of these activities the IT organization undertakes itself, while some are usually performed by other parts of the organization For instance, most of the personnel management functions are typically carried out by a human resources department
Personnel Management
Personnel management encompasses many activities related to the status of employment, training, and the acceptance of policy These personnel management activities ensure that the individuals who are hired into the organization are suitably vetted, trained, and equipped to perform their functions It is important that they are provided with the organization s key policies so that their behavior and decisions will reflect the organization s needs
Hiring
The purpose of the employee hiring process is to ensure that the organization hires persons who are qualified to perform their stated job duties and that their personal, professional, and educational history is appropriate The hiring process includes several activities necessary to ensure that candidates being considered are suitable Background Verification It is estimated that 30 90 percent of employment candidates exaggerate their education and experience on their r sum , and some candidates commit outright fraud by providing false information about their education or prior positions Because of this, employers need to perform their own background
2: IT Governance and Risk Management
investigation on an employment candidate to obtain an independent assessment of the candidate s true background Employers should examine the following parts of a candidate s background prior to hiring: Employment background An employer should check at least two years back, although five to seven years is needed for mid- or senior-level personnel Education background The employer should confirm whether the candidate has earned any of the degrees or diplomas listed on their r sum There are many diploma mills, enterprises that will print a fake college diploma for a fee Military service background If the candidate served in any branch of the military, then this must be verified to confirm whether the candidate served at all and whether they received relevant training and work experience Professional licenses and certifications If a position requires licenses or certifications, these need to be confirmed, including whether the candidate is in good standing with the organizations that manage the licenses and certifications Criminal background The employer needs to investigate whether the candidate has a criminal record In countries with a national criminal registry like the National Crime Information Center (NCIC) in the United States, this is simpler than in countries like India that have no nationwide database Credit background The employer may wish to examine a candidate s credit and financial history There are two principal reasons for this type of a check: first, a good credit history indicates the candidate is responsible, while a poor credit history may be an indication of irresponsibility or poor choices (although in many cases a candidate s credit background is not entirely his or her own doing); second, a candidate with excessive debt and a poor credit history may be considered a risk for embezzlement, fraud, or theft Terrorist association Some employers wish to know whether a candidate has documented ties with terrorist organizations In the United States, an employer can request a verification on whether a candidate is on one of several lists of individuals and organizations with whom US citizens are prohibited from doing business Lists are maintained by the Office of Foreign Assets Control (OFAC), a department of the US Treasury, and also by the US Department of Commerce and the US Bureau of Industry and Security References The employer may wish to contact two or more personal and professional references people who know the candidate and will vouch for his or her background, work history, and character NOTE In many jurisdictions, employment candidates are required to sign a consent form that will allow the employer (or a third-party agent acting on behalf of the employer) to perform the background check
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