Risk Acceptance and Risk Register Policy and Procedure

This policy and procedure document establishes the framework for Risk Acceptance and the maintenance of the Risk Register within the organization's IT risk management program. It builds upon the IT Risk and Control Library Policy and Procedure by providing specific guidance on formally accepting risks that cannot be fully mitigated and systematically tracking all identified risks. The goal is to ensure informed decision-making, accountability, and alignment with organizational objectives, while supporting compliance with regulatory requirements and best practices such as ISO 31000 and NIST SP 800-30.

This procedure promotes transparency in risk treatment decisions, minimizes residual risks through oversight, and maintains a centralized, auditable record of risks to facilitate ongoing monitoring and reporting.

Scope

This document applies to all identified IT-related risks across the organization, including those arising from systems, applications, networks, cloud resources, projects, and third-party engagements. It covers:

• The evaluation and formal acceptance of risks rated Medium, High, or Extreme where full mitigation is not feasible.

• The creation, update, and review of the Risk Register for all risks (Low to Extreme).

• All departments, including IT, operations, projects, privacy, and compliance teams.

Exclusions: Operational risks outside IT scope are managed under separate business continuity procedures.

Definitions

• Risk: A potential event that could negatively impact organizational objectives, quantified as Probability (Likelihood) × Severity (Impact).

• Risk Acceptance: The explicit decision by authorized personnel to tolerate a risk at its current level without further mitigation, typically due to cost-benefit analysis, low residual impact, or strategic alignment. Acceptance requires documentation of rationale and monitoring plans.

• Risk Register: A dynamic, centralized repository (e.g., spreadsheet, database, or tool like RiskWatch or Excel) that catalogs all identified risks, including details on assessment, treatment, ownership, and status.

• Residual Risk: The risk remaining after treatment or acceptance.

• Probability (Likelihood): The estimated chance of a risk occurring (rated 1-5; see Risk Assessment Methodology).

• Severity (Impact): The potential consequences if the risk materializes (rated 1-5).

• Risk Rating: The overall classification (Low, Medium, High, Extreme) based on the Risk Rating Matrix.

• Risk Owner: The individual or team accountable for managing and monitoring a specific risk.

• Compensating Controls: Alternative measures implemented to offset unmitigated risks during acceptance.

Roles and Responsibilities

Role/Team	Responsibilities
IT Governance Team	Oversees the Risk Register; reviews and approves risk acceptance requests; conducts quarterly audits; reports to senior management on register status.
IT Security Team	Identifies and assesses risks; recommends acceptance criteria; monitors accepted risks for changes in probability/severity.
Risk Owners	Documents risks in the register; implements treatment plans or justifies acceptance; provides status updates during reviews.
Portfolio/Project Management Team	Integrates risk assessment into project lifecycles; updates register for project-specific risks; escalates high/extreme risks for acceptance review.
Privacy and Compliance Team	Ensures accepted risks comply with data protection regulations (e.g., GDPR, CCPA); reviews cross-border risk implications.
Senior Management/Executive Sponsor	Approves acceptance for High/Extreme risks; allocates resources for monitoring accepted risks.
All Employees and Contractors	Report potential risks promptly; adhere to monitoring requirements for accepted risks in their areas.

Policy Statement

The organization adopts a risk-based approach to IT governance, where all identified risks must be documented in the Risk Register and treated according to their rating. Risks that cannot be avoided, transferred, or fully mitigated may be formally accepted only after a thorough evaluation of residual impact, costs, and benefits. Acceptance does not imply inaction; all accepted risks require defined monitoring thresholds, periodic reviews, and escalation triggers. Unauthorized acceptance or failure to maintain the Risk Register will result in disciplinary action. This policy aligns with the IT Risk and Control Library by linking accepted risks to related controls and implementation procedures.

Risk Assessment Methodology

Risks are assessed using the standardized methodology from the IT Risk and Control Library to ensure consistency. This informs both treatment decisions and acceptance eligibility.

Probability Levels

• 1: Rare (<5% chance)

• 2: Unlikely (5-25% chance)

• 3: Possible (26-50% chance)

• 4: Likely (51-75% chance)

• 5: Almost Certain (>75% chance)

Severity Levels

• 1: Insignificant (minor disruption, no material impact)

• 2: Minor (recoverable with minimal effort/cost)

• 3: Moderate (requires moderate resources, temporary disruption)

• 4: Major (significant financial/reputational damage)

• 5: Severe (catastrophic impact, regulatory violations)

Risk Rating Matrix

Risk Rating = Probability × Severity. Use the following matrix for classification:

Probability / Severity	1 (Insignificant)	2 (Minor)	3 (Moderate)	4 (Major)	5 (Severe)
5 (Almost Certain)	Medium	High	High	Extreme	Extreme
4 (Likely)	Medium	Medium	High	High	Extreme
3 (Possible)	Low	Medium	Medium	High	High
2 (Unlikely)	Low	Low	Medium	Medium	High
1 (Rare)	Low	Low	Low	Medium	Medium

Risk Levels and Treatment Guidance

• Low: Monitor annually; implicit acceptance with minimal oversight.

• Medium: Implement controls within 6 months; consider acceptance if mitigation costs exceed benefits.

• High: Mitigate within 3 months; formal acceptance requires IT Governance approval and compensating controls.

• Extreme: Immediate action required; acceptance only with executive sponsorship and quarterly reviews.

Assessments must reference the IT Risk Library for categorization (e.g., RISK-AC-001) and link to applicable controls.

Risk Acceptance Procedure

Risk acceptance is a structured process to ensure decisions are informed and documented. Follow these steps:

1. Identification and Initial Assessment: During risk identification (e.g., via ISRAs, audits, or incident reports), assess using the Risk Rating Matrix. If mitigation is not viable (e.g., due to technical constraints or disproportionate costs), flag for acceptance review.

2. Rationale Documentation: The Risk Owner prepares a Risk Acceptance Request Form (template below), including:

   • Risk ID and description (from Risk Library).

   • Current rating and residual risk projection.

   • Justification (e.g., cost-benefit analysis, strategic alignment).

   • Proposed compensating controls (linked to Control Library).

   • Monitoring plan (e.g., thresholds for re-assessment: probability increase >1 level or severity >2 levels).

3. Review and Approval:

   • Submit to IT Governance Team for Medium/High risks.

   • Escalate High/Extreme to Senior Management for approval.

   • Timeline: Within 5 business days for initial review; 10 days for final approval.

   • Denials require alternative treatment plans.

4. Implementation and Notification:

   • Update the Risk Register with acceptance status.

   • Notify stakeholders (e.g., via email or dashboard).

   • Deploy compensating controls per Control Implementation Procedures.

5. Post-Acceptance Monitoring:

   • Review accepted risks quarterly (or sooner if triggers met).

   • Re-assess if organizational changes occur (e.g., new regulations).

   • Escalate if residual risk rating increases.

Risk Acceptance Request Form Template

Field	Details
Request Date	[YYYY-MM-DD]
Risk ID	[e.g., RISK-AC-001]
Description	[Brief summary]
Current Rating	[Low/Medium/High/Extreme]
Rationale for Acceptance	[Detailed justification]
Residual Risk Projection	[Updated Probability/Severity/Rating]
Compensating Controls	[IDs from Control Library, e.g., CTRL-IAC-001]
Monitoring Plan	[Triggers, frequency, responsible party]
Risk Owner	[Name/Team]
Approver	[Signature/Date]

Risk Register Maintenance Procedure

The Risk Register serves as the single source of truth for all IT risks. It must be updated in real-time and reviewed regularly.

1. Entry Criteria:

   • All identified risks (from ISRAs, audits, projects, or reports) must be entered within 2 business days.

   • Assign unique ID (e.g., RR-[YYYY]-[Sequential], linked to Risk Library).

   • Include mandatory fields: Description, Category, Probability, Severity, Rating, Owner, Status (Open/Mitigated/Accepted/Closed), Treatment Plan, Due Date, Last Review Date.

2. Structure and Fields (Minimum):

   Field	Description	Example
   Risk ID	Unique identifier	RR-2025-001
   Description	Detailed risk statement	Unauthorized access to cloud storage due to weak MFA.
   Category	From Risk Library (e.g., Access Control)	AC
   Probability	1-5 scale	3
   Severity	1-5 scale	4
   Risk Rating	Low/Medium/High/Extreme	High
   Owner	Responsible party	IT Security Team
   Status	Open/Mitigated/Accepted/Closed	Accepted
   Treatment	Plan or acceptance details	Accepted with CTRL-MFA-001; monitor quarterly.
   Related Controls	IDs from Control Library	CTRL-IAC-001
   Last Review	Date of last update/review	2025-10-08
   Notes	Escalations or changes	Re-assess post-AWS update.

3. Update Process:

   • Risk Owners update status upon treatment milestones or changes.

   • IT Governance Team validates entries weekly.

   • Archive closed risks after 12 months of inactivity.

4. Review and Reporting:

   • Quarterly full review by IT Governance Team.

   • Generate reports: Risk distribution by rating, acceptance trends, overdue actions.

   • Annual audit for completeness (target: 100% coverage of identified risks).

5. Tools and Access:

   • Use [Specify tool, e.g., Microsoft Excel/SharePoint or GRC software].

   • Access controls: View-only for most users; edit rights for owners and governance team.

Integration with IT Risk and Control Library

• Linkages: Risk Register entries reference Risk Library IDs for categorization and Control Library for mitigations/compensating controls.

• ISRA Alignment: Risks from ISRAs feed directly into the register; acceptance decisions inform questionnaire mappings.

• Relationships: Accepted risks are flagged in implementation procedures; monitor via the matrix to trigger re-assessments.

Compliance Monitoring and Auditing

• Metrics:

  • Percentage of risks formally assessed and registered (target: 100%).

  • Number of accepted risks (track trends; limit to <20% of total).

  • Timeliness of updates (target: 95% within due dates).

• Audits: Conduct internal audits bi-annually; external as required by regulations.

• Reporting: Monthly dashboard to senior management; include accepted risks with residual projections.

• Enforcement: Non-compliance (e.g., undocumented acceptance) escalates to HR for review.