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Establish a risk management strategy for the organization that includes a determination of risk tolerance.
Potential Inputs: Organizational mission statement; organizational policies; organizational risk assumptions, constraints, priorities and trade-offs.
Expected Outputs: Risk management strategy and statement of risk tolerance inclusive of information security and privacy risk.
Primary Responsibility: Head of Agency.
Supporting Roles: Senior Accountable Official for Risk Management or Risk Executive (Function); Chief Information Officer; Senior Agency Information Security Officer; Senior Agency Official for Privacy.
Discussion: Risk tolerance is the degree of risk or uncertainty that is acceptable to an organization. Risk tolerance affects all parts of the organization’s risk management process, having a direct impact on the risk management decisions made by senior leaders or executives throughout the organization and providing important constraints on those decisions. The risk management strategy guides and informs risk-based decisions including how security and privacy risk is framed, assessed, responded to, and monitored. The risk management strategy may be composed of a single document, or separate security and privacy risk management documents.54 The risk management strategy makes explicit the threats, assumptions, constraints, priorities, trade-offs, and risk tolerance used for making investment and operational decisions. This strategy includes the strategic-level decisions and considerations for how senior leaders and executives are to manage security and privacy risks (including supply chain risks) to organizational operations, organizational assets, individuals, other organizations, and the Nation. The risk management strategy includes an expression of organizational risk tolerance; acceptable risk assessment methodologies and risk response strategies; a process for consistently evaluating security and privacy risks organization-wide; and approaches for monitoring risk over time. As organizations define and implement the risk management strategies, policies, procedures, and processes, it is important that they include SCRM considerations. The risk management strategy for security and privacy connects security and privacy programs with the management control systems established in the organization’s Enterprise Risk Management strategy.55
References: [SP 800-30]; [SP 800-39] (Organization Level); [SP 800-160 v1] (Risk Management, Decision Management, Quality Assurance, Quality Management, Project Assessment and Control Processes); [SP 800-161]; [IR 8062]; [IR 8179] (Criticality Analysis Process B); [NIST CSF] (Core [Identify Function]).

54 A separate supply chain risk management strategy document is called a supply chain risk management plan.

55 See [OMB A-123].