IT Compliance Advisor

Jun 17 2009   7:16PM GMT

Don’t forget business model risk in your risk management strategy

Scot Petersen Scot Petersen Profile: Scot Petersen

The MIT Sloan CIO Symposium on May 20 in Cambridge, Mass., featured several panels on the top issues affecting CIOs. But one panel on governance, risk and compliance afterwards produced the most interesting discussion of the day, for me at least, when I caught up with two Patni Americas Inc. directors, Amit Sen and John Vaughan, also in attendance.

The two management consultants are proponents of expanding the definition and practice of risk management to include business model risk — that is, risk introduced into your company by new or changed capital ventures or business processes. In their view, business process automation has run amok, leaving the business (as well as the IT organization), exposed to risks that it might not be aware of.

“What we need to understand is where are we are introducing risks, and the risk is understood and planned and not a byproduct of a lack of knowledge or visibility into what actually goes on in the organization,” said Sen in the following podcast, recorded this week. In the podcast, Sen and Vaughan explain what business model risk is, how to measure and understand it, and how to make business model risk a key part of any risk management and IT governance strategy.

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