Section: Volume D

The most important characteristic of a key risk indicator (KRI) to enable decision-making is illustrating changes in risk trends, as it provides a clear and timely indication of the direction and magnitude of the risk level and exposure, and enables the stakeholders to take proactive and appropriate actions to address the risk.
The other options are not the most important characteristics, as they are more related to the monitoring, measurement, or identification of the risk, respectively, rather than the illustration of the risk trends. References = CRISC Review Manual, 7th Edition, page 110.

New regulatory requirements impacting IT are those that impose new obligations, restrictions, or standards on how an organization uses, manages, or secures its IT systems, data, or services1. Examples of such regulations include the GDPR, the CCPA, the HIPAA, or the PCI-DSS2. New regulatory requirements impacting IT can pose significant challenges and risks for an organization, such as:
* Compliance costs and efforts, such as updating policies, procedures, and systems, training staff, or hiring experts
* Noncompliance penalties and consequences, such as fines, lawsuits, sanctions, or reputational damages
* Operational disruptions or inefficiencies, such as system changes, data migrations, or service interruptions
* Competitive disadvantages or opportunities, such as losing or gaining customers, partners, or markets3 The first step that should be done when a company is made aware of new regulatory requirements impacting IT is to review the risk tolerance and appetite. Risk tolerance is the acceptable level of variation that an organization is willing to accept around its risk appetite. Risk appetite is the amount and type of risk that an organization is willing to take in order to meet its strategic objectives. By reviewing the risk tolerance and appetite, the company can:
* Establish a clear and consistent understanding of the organization's goals, values, and expectations regarding the new regulatory requirements impacting IT
* Assess the current and potential impacts of the new regulatory requirements impacting IT on the organization's performance, operations, or assets
* Determine the level of risk exposure and acceptance that the organization is comfortable with, and
* identify the risk thresholds or limits that should not be exceeded
* Align the risk management strategies and actions with the organization's risk tolerance and appetite, and prioritize the most critical and urgent risks to be addressed
* Communicate and report the risk tolerance and appetite to the stakeholders and regulators, and ensure transparency and accountability References = Regulating emerging technology | Deloitte Insights, Ten Key Regulatory Challenges of 2024 - kpmg.com, The Risks of Non-Compliance with Data Protection Laws, [Risk Tolerance - COSO], [Risk Appetite - COSO], [Risk Appetite and Tolerance - IRM]

If preventive controls cannot be implemented due to technology limitations, the first step to reduce risk is to evaluate alternative controls. Alternative controls are those that can achieve the same or similar objectives as the original preventive controls, but using different methods or technologies. For example, if a firewall cannot be installed due to hardware compatibility issues, an alternative control could be a network segmentation or a proxy server. Evaluating alternative controls requires assessing their feasibility, effectiveness, efficiency, and cost-benefit. Redefining the business process, developing a plan to upgrade technology, and defining a process for monitoring risk are also possible actions to reduce risk, but they are not the first step, and they may not be feasible or desirable in some situations. References = Risk and Information Systems Control Study Manual, Chapter 4, Section 4.3.1, page 4-23.