From chaos to control: How risk management helps reduce compliance costs

Organizations that embrace strategic risk management are five times more likely to gain the trust of stakeholders and achieve better business outcomes. Yet, many companies struggle with the effective implementation of risk management in an increasingly complex IT landscape. Why is that so?

The problem is obvious: organizations are inundated with a multitude of frameworks, laws, and regulations that they must comply with. Each compliance area takes a different approach, leading to inefficiencies and increased risk. Rapid technological developments make risk management more complex than ever.

However, the solution is not blindly following every framework or regulation. Effective IT risk management starts with developing a tailored risk and control framework that aligns with your specific business situation. By then linking compliance requirements to this framework, you not only reduce audit load, but also create a more efficient approach to supplier risk management and the entire risk management process.

In this guide, I'll share what many of my clients should have known long ago: how to transform compliance from a burden to a strategic advantage. By identifying and implementing the underlying value of compliance requirements, compliance can provide substantial value to your business.

What is IT risk management and why is it more complex than ever?

IT risk management is the systematic process of identifying, analyzing, and mitigating risks associated with IT infrastructure and systems [2]. This includes risk assessments, implementation of mitigation measures, and continuous monitoring of security postures. However, in today's digital world, this process has become more complex than we've ever seen.

Increasing reliance on technology

Modern business operations are inextricably linked to technology. Organizations are increasingly relying on digital systems for virtually every aspect of their operations. This dependency creates new vulnerabilities that need to be carefully managed. With the popularity of cloud applications, more and more applications are also present in the application landscape of organizations, many of which are linked together in different ways.

This growing technological entanglement has led to what experts call "complexity" – a fundamental risk that manifests itself in several ways:

• Infrastructure complexity: More components mean more potential points of failure
• Integration complexity: Any change or security update becomes riskier
• Code complexity: especially with the rise of microservices instead of homogeneous code [3]

In addition, rapid technological obsolescence creates additional challenges, with advanced solutions quickly becoming obsolete and thus hindering agility and growth.

New risks: cyber threats, data breaches, cloud

The cyber threat landscape is constantly evolving and creating new challenges for organizations. Recent data shows that the average cost of a data breach in the US is around €9.44 million [4], while globally the average cost of a damaging cyberattack is estimated at €3.9 million (4.4 million USD) [5].

The most common and harmful threats include:

1. Ransomware attacks, which are expected to increase in 2025, mainly target critical infrastructure [6]
2. IoT vulnerabilities due to the growing number of connected devices [6]
3. Cloud-related threats due to misconfigurations and unauthorized access [5]
4. Supply chain attacks that third parties use to infiltrate larger organizations [6]

The adoption of cloud services adds an extra dimension to these challenges. The shared responsibility model for cloud security requires a clear understanding of who is responsible for which aspect of security, ranging from infrastructure to applications and data, depending on the type of cloud deployment (IaaS, PaaS, or SaaS) [7].

Compliance as an extra layer of complexity

In addition to the technological risks, organizations today must comply with a growing number of legal and regulatory requirements. According to a Gartner study, by 2024, the personal information of 75% of the world's population will be protected by modern privacy regulations, up from 20% in 2020 [8].

This increasing regulatory burden adds a significant layer of complexity to IT risk management. Non-compliance can lead to serious financial consequences.

This increases the pressure on Chief Information Security Officers (CISOs), with demands for robust evidence of effective governance, including detailed reporting on material cyber risks and incidents [9]. This makes it essential to develop an integrated approach that effectively manages both IT risks and compliance requirements .

The 6 steps of an effective IT risk management process

A solid IT risk management process is the foundation of any successful security strategy. By taking a systematic approach, organizations can not only identify their vulnerabilities, but also proactively manage them. Let's take a look at the six essential steps.

1. Risk identification: internal and external sources

The risk management process starts with identifying all the potential risks that could threaten your organization. This includes both internal risks (such as human error and technological failures) and external risks (such as natural disasters and economic fluctuations).

Effective risk identification required:

• Involving different perspectives through brainstorming sessions and interviews
• Analysis of historical incident data to identify recurring risks
• Systematic documentation in a risk register

2. Risk analysis: impact and probability

Once identified, risks must be analyzed for two crucial factors: the likelihood of them occurring and the potential impact if they materialize. This analysis can be qualitative or quantitative, depending on your specific business needs.

For each risk, you assess:

• The likelihood of the risk manifesting itself
• The potential impact on your business
• How this information can be used for risk prioritization

An effective risk analysis helps create a risk matrix that allows you to immediately see which risks require immediate attention.

3. Control selection and implementation

After the risk assessment, the selection and implementation of appropriate controls follows. This includes choosing technical, procedural, and administrative measures that are tailored to your organization's specific risks.

Checks should:

• Be tailored to your specific business environment
• Be assigned to specific system elements
• Be documented in security and privacy plans

This step lays the foundation for a scalable control framework to which compliance requirements can later be linked.

4. Budget and resource allocation

Effective risk management requires adequate resources and a thoughtful allocation of budgets. You should allocate resources based on identified risks, prioritizing areas with the highest risks.

In budget management, it is essential to:

• Allocation of resources based on risk assessment
• Set aside a separate budget for unforeseen events
• Integrate costs for mitigating measures into the overall budget

By strategically allocating resources, you create a balance between operational needs and strategic investments.

5. Risk treatment: avoid, reduce, transfer, accept

Any identified risk should be addressed according to one of four main strategies:

1. Risk avoidance: Completely eliminating a risk
2. Risk reduction: Reducing probability or impact
3. Risk transfer: Sharing risk with third parties, such as through cyber insurance
4. Risk acceptance: The conscious acceptance of risks within the tolerance limits

It is crucial that risk acceptance is a conscious decision and not the result of negligence.

6. Monitoring and reporting

The final step is ongoing monitoring and reporting. Risk management is not a one-off activity but an ongoing process. Organizations should regularly evaluate their security controls and adjust existing strategies.

Effective monitoring includes:

• Setting key risk indicators (KRIs)
• Regular reviews of the effectiveness of controls
• Clear reporting structures for stakeholders

This step forms a vital connection between system-level risk management and organizational-level risk management [10], enabling better decision-making.

By systematically going through these six steps, you will develop a solid IT risk management process that not only meets compliance requirements, but also adds real value to your business.

The role of compliance in modern IT risk management

Compliance is the foundation for effective IT risk management in today's digital environment. As an IT professional, I see that organizations are facing an increasingly challenging regulatory landscape that requires a strategic approach rather than a simple box-tick mentality.

What is compliance in an IT context?

"Compliance" in the IT world means adhering to applicable laws, industry standards or voluntary commitments – in short, acting "in accordance with the rules". It includes both government-imposed rules, regulatory requirements, and internal company guidelines. Compliance goes beyond just technical measures; It is a holistic approach to protecting data, systems and processes.

Is compliance a one-time activity? Absolutely not. It is an ongoing process that requires constant attention. Organizations receive an average of 234 regulatory alerts per day, highlighting the complexity of modern compliance requirements. This explains why an integrated approach is essential.

Examples of relevant standards (ISO 27001, NIS2)

For effective IT compliance, several standards provide actionable frameworks:

• ISO 27001: This international standard provides guidelines for setting up and maintaining an Information Security Management System (ISMS). ISO 27001 defines best practices, policies, and procedures to mitigate security risks.
• NIS2: The European NIS2 directive focuses on increasing security levels of network and information systems within the EU. This directive, which will come into force in July 2025, will expand to various sectors including the food industry, financial sector and public services.

In addition to these standards, compliance can also include legislation such as GDPR for data protection or sector-specific regulations such as NEN7510 for healthcare. Customer requirements such as complying with the SOC 2 framework or providing a SOC 1 / ISAE 3402 report often come up as a 'burden' to comply with.

Compliance as part of risk management

Compliance focuses primarily on meeting established standards, while risk management takes a broader view by identifying potential threats, including those that are not yet covered by compliance requirements. What happens when these two functions operate in silos? Organizations then expose themselves to significant risks and operational inefficiencies.

An integrated approach to compliance and risk management, on the other hand, offers several advantages:

• Holistic risk visibility for more informed decision-making
• Optimized resources through consolidation of compliance processes
• Improved response to changing regulations

Experience shows that companies with robust compliance and risk management programs spend less time and money on overhead. When risk management and compliance management is properly implemented, it actually adds value to the organization.

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Credentials

[1] - https://csrc.nist.gov/glossary/term/risk_management
[3] - https://www.uki.logicalis.com/article/it-complexity-significant-factor-managing-it-risk-0
[4] - https://www.ibm.com/reports/data-breach
[5] - https://www.pwc.com/bm/en/press-releases/pwc-2024-global-digital-trust-insights.html
[6] - https://cloudsecurityalliance.org/blog/2025/01/14/the-emerging-cybersecurity-threats-in-2025-what-you-can-do-to-stay-ahead
[7] - https://www.paloaltonetworks.co.uk/cyberpedia/cloud-security-threats-detection-and-challenges
[8] - https://www.gartner.com/en/newsroom/press-releases/2022-05-31-gartner-identifies-top-five-trends-in-privacy-through-2024
[9] - https://www.auditboard.com/blog/it-compliance-trends-for-2025-a-dynamic-regulatory-environment-increases-complexity-scrutiny-and-pressure/
[10] - https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-37r2.pdf

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