Let us start with a confession. We use to believe that the right technology could mitigate any risk. We thought that if we just buy the best firewall, the most advanced monitoring, or employ the best skilled experts, it was assurance that we were protected. However, reality has a way of humbling us, as with all the technology money can buy, we are still getting breached. The point is, when we peel back the layers after any post security incident review, it is almost always misalignment that is to blame.
We talk endlessly about compliance, resilience, and digital transformation. Yet time and again, the same incidents emerge under a different name. Not because we lacked technology or frameworks, but because the parts of our organisations meant to move as one failed to stay in sync.
Saying this may unsettle boardrooms and equally re-affirm what risk & compliance experts have been saying for years:
“Risk is not your enemy, the real threat, the silent sabotage is organisation misalignment”
The world does not suffer from too much risk. It suffers from poor risk literacy.
What Risk Is-and What It Is not
Risk vs. Uncertainty
Risk is the measurable possibility that an event will occur and impact objectives. It is not inherently negative; it is the cost of doing business, innovating, and competing.
Uncertainty, on the other hand, is the domain of the unknown, where probabilities are unclear and outcomes unpredictable.
Many organizations confuse risk with uncertainty, leading to risk-averse cultures that stifle progress. As the OECD Principles of Corporate Governance , FSB and COSO ERM underscore.
“effective risk governance is not about eliminating risk, but about aligning risk-taking with strategic business objectives and capacity”
Common Misperceptions
- Risk is always bad: In reality, risk is necessary for growth and innovation.
- Risk can be eliminated: Impossible. The goal is careful management and alignment, not avoidance.
- Compliance equals risk management: Compliance is one element; true risk management is broader and more strategic.
The True Enemy: Misalignment
Misalignment occurs when there are disconnects between:
- Risk Appetite vs. Risk Capacity
- An organisation’s risk appetite is the level of risk it is willing to accept in pursuit of its objectives (what they are willing to swallow).
- Risk capacity is the amount of risk it can absorb without jeopardizing its survival (what they can actually digest).
“Misalignment occurs when an organisation’s appetite exceeds its capacity, leading to systemic exposure”
- Culture vs. Control: A strong risk culture encourages transparency and challenge. Weak culture breeds silence and corner-cutting, undermining even the best controls.
- Governance vs. Execution: Effective governance provides the framework for risk management, setting the tone from the top and ensuring accountability. When governance is disconnected from operational execution, risk management becomes a theoretical exercise. This disconnect can manifest as a lack of clear roles and responsibilities, inadequate communication, or insufficient monitoring of controls.
“Policies at the top mean little if not translated into everyday actions”
The Financial Stability Board’s Thematic Review on Risk Governance highlights that
“alignment-across strategy, culture, and operations-is the foundation of resilience”
A Framework for Alignment
The “Three Lines of Defence” model :
- First Line: Operational management owns and manages risk.
- Second Line: Risk management and compliance functions provide oversight and expertise.
- Third Line: Internal audit offers independent assurance. The 4th Line – External Audit & Supervisors
When these lines operate in harmony, risks are surfaced, assessed, and managed effectively. When siloed or misaligned, risks go unrecognized or unaddressed until it is too late.
Real-World Lessons: Misalignment in Recent Cybersecurity Crises
Let us examine two recent, high-profile cases that underscore how misalignment, not risk itself-drives cyber crises:
1. Change Healthcare Ransomware Attack (2024)
What Happened:
In February 2024, Change Healthcare was crippled by a ransomware attack attributed to the ALPHV/BlackCat group, disrupting pharmacy services nationwide for weeks.
The Misalignment:
The company’s appetite for rapid integration and operational efficiency outpaced its risk capacity for robust cybersecurity oversight. Legacy systems and inconsistent multi-factor authentication and delayed patching left exploitable gaps.
The Result:
A manageable cyber risk escalated into a nationwide healthcare crisis, costing hundreds of millions and drawing regulatory scrutiny. A gap between governance intent and operational reality amplified the breach’s impact.
2. MGM Resorts Cyberattack (2023)
What Happened:
In September 2023, MGM Resorts International suffered a cyberattack that shut down hotel room keys, slot machines, and online reservations.
The Misalignment:
Despite investments in cybersecurity tools, the organisational culture undervalued employee training and incident response. The “human firewall” was neglected, and plans were not fully rehearsed.
The Result:
A preventable risk escalated into a multi-day operational crisis, costing over $100 million.
“These cases are not failures of risk-taking, they are failures of alignment between governance, culture, risk appetite, and execution”
The Role of Culture, Ethics, and Leadership
No framework or control can compensate for a toxic or misaligned culture. The COSO Internal Control-Integrated Framework emphasize that ethical leadership and a culture of accountability are paramount to preventing adversities. Leaders must set expectations, model desired behaviours, and foster an environment were speaking up is safe and valued.
Choosing the Right Risk Response
Once risks are identified and aligned with objectives, organizations must choose an appropriate response:
- Acceptance: When risk is within appetite and capacity, and the reward justifies it (e.g., entering a new market after due diligence).
- Avoidance: When risk is unacceptable or unmanageable (e.g., declining to operate in a volatile jurisdiction).
- Transfer: Shifting risk to another party (e.g., cyber insurance).
- Mitigation: Reducing likelihood or impact (e.g., implementing multi-factor authentication).
ISO/IEC 15408-1:2022 stress that risk response must be tailored, not one-size-fits-all.
The New Frontier: AI, Dynamic Governance, and Adaptive Compliance
Today’s most concerning risks are related to artificial intelligence-its power, opacity, and potential for both value and harm. The NIST AI Risk Management Framework and ENISA’s Framework for AI Cybersecurity Practices provide guidance, but the pace of change is relentless.
Aligning for the Future
- Dynamic Governance: Boards and leadership must be agile, continuously reassessing risk as new technologies and threats emerge.
- Adaptive Compliance: Compliance programs must evolve, leveraging AI and analytics to detect emerging risks in real time.
- Ethics and Trust: As AI systems make more decisions, embedding ethical principles and transparency is non-negotiable.
The OECD, FSB, and IOSCO all advocate for governance frameworks that are not static, but adaptive-able to realign as the environment changes.
Making Alignment Your Competitive Advantage
Risk is not the enemy. It is the raw material of progress and innovation. Misalignment-between what we say, what we do, and what we value-is the true threat to organizational success.
As AI reshapes organisations landscape, those who achieve and maintain alignment will not only survive, but thrive.
The future belongs to those who manage risk wisely-not by trying to eliminate it, but by aligning it with purpose, culture, and capability.
IT Minister provides proactive Cyber Security Management. Our goal is to strengthen your defences and improve your security posture. This is achieved with our expert advice and complementary services. We exceed compliance standards, aiming to ensure you achieve the highest level of security maturity.
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