Cybersecurity Risk Governance: Who Owns the Risk, Who Manages the Exceptions?
As cyber threats have evolved from occasional nuisances to existential risks, the governance of cybersecurity risk has become a core business priority. It is no longer enough to rely on technical teams alone. Instead, cybersecurity risk must be governed with clarity, accountability, and cross-functional collaboration.
Understanding Cybersecurity Risk Governance
Cybersecurity risk governance refers to the structures, processes, and decision-making frameworks that guide how an organization identifies, assesses, accepts, mitigates, and monitors cyber-related risks. It ensures that cyber risks are managed in alignment with the organization's business goals, legal obligations, and risk appetite.
Among the most challenging aspects of this governance is determining who owns the risk and who has the authority to approve, manage, and monitor security exceptions. This is the crux of cybersecurity risk governance: the intersection of responsibility, authority, and risk acceptance.
Defining Risk Ownership
One of the first steps in effective cybersecurity risk governance is defining ownership. Risk ownership refers to the individual or entity within an organization that is ultimately accountable for a specific risk. This does not mean they are responsible for mitigating it directly, but they must ensure that the risk is identified, assessed, and appropriately treated.
Risk Ownership Examples:
CISO: Oversees security strategy and overall cybersecurity posture
Head of Finance: Owns risk of ransomware impacting financial operations
VP of Operations: Owns risk of system downtime affecting business continuity
Legal Counsel: Owns risk of regulatory non-compliance
Business Unit Leaders: Own risk for their specific assets and processes
Clear risk ownership avoids the "everyone's problem, no one's responsibility" phenomenon. Without assigned owners, cybersecurity risks tend to fall into operational gaps. When a risk materializes — such as a breach caused by an unpatched system — finger-pointing ensues, and response time slows.
Exception Management Authority
But what about exceptions? Security exceptions — deviations from established controls — are often necessary in complex environments. A business unit might need to run an application that doesn't support multifactor authentication. A developer might require elevated access to test legacy systems.
The authority to approve security exceptions must be clearly defined in the cybersecurity governance model. Ideally, this authority is tiered based on risk level.
Tiered Exception Approval Authority:
Low-Risk Exceptions: Temporary access to non-critical systems — Security team lead approval
Medium-Risk Exceptions: Skipping vulnerability patches for compatibility — Director-level approval
High-Risk Exceptions: Disabling encryption or bypassing access controls — Executive leadership or board approval
Formalizing the Approval Process
This tiered approach ensures that risk tolerance is aligned with organizational priorities and that high-impact decisions are not made in isolation. It also builds transparency into the process.
Common Governance Pitfalls:
Too often, exceptions are granted informally through verbal approval or undocumented Slack messages — which erodes governance and creates unmanaged risk. Formalizing the approval process ensures that exceptions are treated as deliberate, accountable risk decisions.
Exception Approval Process Requirements:
- Written justification for the exception
- Risk assessment and impact analysis
- Proposed compensating controls
- Duration and expiration date
- Approval chain documentation
- Regular review schedule
- Closure criteria and final disposition
Risk Acceptance and Business Ownership
An effective cybersecurity governance framework also includes a "risk acceptance" component. Not all risks can be eliminated. Some must be accepted formally and with full awareness of the potential consequences.
Risk Acceptance Example:
Scenario: A logistics company's routing system cannot support encryption due to outdated firmware. Replacing the system will take nine months.
CISO Role: Assesses the risk and recommends strong network segmentation as a compensating control.
Business Ownership: The VP of Operations who relies on the system daily must formally accept the residual risk and document their decision.
Governance Principle: Cybersecurity provides guidance, but business leadership makes the final call.
This is where the line between ownership and governance becomes critical. A CISO or security team might identify and assess the risk of allowing a security exception, but they should not be the sole authority to approve it. Risk should be accepted by the business function that owns the asset or process being protected.
Continuous Monitoring and Review
Cybersecurity risk governance also requires continuous monitoring and review. Ownership and acceptance are not one-time activities. As the threat landscape evolves, technology changes, or business needs shift, risks and exceptions must be reassessed.
Review Process Components:
- Quarterly exception assessments
- Risk register updates
- Threat landscape evaluation
- Technology change impact analysis
- Business need validation
- Compensating control effectiveness
- Governance process optimization
Board and Executive Oversight
Boards of directors play a pivotal role in cybersecurity risk governance. While they may not approve specific exceptions, they are responsible for ensuring that governance processes are in place, operating effectively, and aligned with the organization's strategic direction.
Board Governance Responsibilities:
Risk Appetite Setting: Defining acceptable risk levels and tolerance
Major Exception Oversight: Reviewing high-impact security decisions
Enterprise Risk Management: Integrating cyber risk into overall risk strategy
Governance Maturity: Ensuring effective governance processes
Regulatory Compliance: Overseeing compliance with cybersecurity regulations
Increasingly, regulatory bodies and shareholders expect boards to demonstrate oversight of cybersecurity risk — not just in terms of spending, but in terms of governance maturity.
Multi-Layer Governance Model
A well-defined cybersecurity governance model includes several layers, each with specific responsibilities and authorities.
Governance Model Layers:
1. Board and Executive Oversight: Sets risk appetite, reviews major exceptions, and oversees enterprise-level cybersecurity risk management.
2. CISO and Security Leadership: Develops policy, provides risk assessments, maintains the exception register, and advises on controls.
3. Business Unit Leadership: Owns risk for their assets, requests exceptions when needed, and accepts or rejects recommendations.
4. Operational Security Teams: Monitor compliance, implement technical controls, and escalate risks or exceptions that exceed predefined thresholds.
5. Audit and Compliance Functions: Evaluate whether governance processes are being followed, and ensure documentation and evidence are sufficient.
Enterprise Risk Management Integration
One governance challenge is the gray area between IT risk and enterprise risk. Many organizations treat cybersecurity as an IT function, which marginalizes its importance.
This ensures that cyber risks are evaluated alongside strategic, operational, and financial risks. The integration allows for a holistic view of organizational risk and enables better decision-making at the executive level.
Regulatory and Compliance Alignment
Exception governance must also align with regulatory expectations. In many regulated industries, including healthcare, finance, and critical infrastructure, regulators expect that any deviation from policy is fully documented, justified, and mitigated through compensating controls.
Regulatory Requirements:
During audits or investigations, inability to demonstrate exception governance can result in fines or operational disruptions. Organizations must maintain clear documentation of every exception, including approval records, risk assessments, and mitigation efforts.
Regulatory Compliance Requirements:
- Exception documentation and justification
- Risk assessment and impact analysis
- Compensating controls implementation
- Approval chain documentation
- Regular review and monitoring
- Audit trail maintenance
- Regulatory reporting capabilities
Cloud and Technology Considerations
Cloud adoption further complicates exception governance. Cloud providers operate under shared responsibility models, meaning that customers must understand where their governance obligations begin and end.
Cloud Exception Governance:
Shared Responsibility: Understanding provider vs. customer security obligations
Exception Documentation: Documenting cloud-specific exceptions in accordance with internal policies
CSPM Tools: Using Cloud Security Posture Management tools to identify ungoverned exceptions
Human Decision-Making: Pairing automated tools with human-driven governance processes
If a cloud-based system requires exceptions — such as skipping logging due to cost constraints or disabling a security agent to maintain performance — those decisions must be documented in accordance with internal governance policies.
Identity and Access Governance
Identity is another cornerstone of exception governance. Many security exceptions involve elevated access, service accounts, or deviations from identity-based controls.
Identity Governance Solutions:
- IGA Platforms: Automate exception approvals and track temporary access
- Time Limits: Enforce automatic expiration of elevated privileges
- Just-in-Time Access: Grant access only when needed for specific purposes
- Session Recording: Monitor and record elevated access sessions
- Segmentation: Isolate environments requiring exceptions
Identity Governance and Administration (IGA) platforms can help automate exception approvals, track temporary access, and enforce time limits. But again, the governance layer — who owns the risk of that access, and who approves it — remains a human decision.
Culture and Training
Culture plays a significant role in risk governance success. If exception governance is viewed as bureaucratic or punitive, employees may avoid it or find workarounds.
Cultural Development Elements:
- Leadership support and modeling
- Comprehensive training programs
- Clear communication of governance processes
- Recognition of good governance practices
- Continuous feedback and improvement
- Integration with performance management
Performance and Accountability
Risk ownership must also be reflected in job descriptions, performance goals, and compensation plans. Executives and managers should be evaluated not just on business outcomes but on their stewardship of risk.
Accountability Framework:
If a business unit routinely circumvents security policies or fails to manage its exceptions, that behavior should carry consequences — just as it would for financial or legal misconduct. This creates a culture where risk governance is taken seriously at all levels of the organization.
This creates a culture where risk governance is taken seriously at all levels of the organization, and where individuals are held accountable for their risk management responsibilities.
Technology and Automation
Technology alone cannot govern cybersecurity risk. While GRC tools, dashboards, and analytics can streamline workflows and provide visibility, they must be part of a broader governance ecosystem.
Technology Governance Support:
GRC Platforms: Streamline workflows and provide visibility
Risk Dashboards: Real-time risk metrics and exception tracking
Automated Reviews: Exception review automation and alerts
Ownership Tracking: Clear assignment and tracking of risk ownership
Decision Support: Context and information for risk decisions
Risk decisions require context, judgment, and accountability — things that no tool can provide on its own. However, when tools are used to support governance by automating exception reviews, tracking ownership, and generating real-time risk metrics, they significantly enhance decision-making.
Critical Governance Questions
To close the loop, effective cybersecurity risk governance answers three critical questions that every organization must address:
Essential Governance Questions:
1. Who owns the risk? Ownership must be clearly assigned, with authority to accept or reject recommendations.
2. Who manages the exception? Approval authorities must be defined by risk tier, with appropriate documentation and oversight.
3. How is the risk tracked and reviewed? A formal process must be in place for reviewing, updating, and retiring exceptions based on changing risk conditions.
These questions form the foundation of effective cybersecurity risk governance and ensure that organizations have the right structures, processes, and accountability in place.
Conclusion
Cybersecurity risk governance is a strategic discipline that ensures decisions are made by the right people, with the right information, and within the right risk boundaries.
As cyber threats continue to rise, governance is not just a compliance requirement — it is the foundation of sustainable digital resilience. Organizations that master cybersecurity risk governance position themselves to thrive in an increasingly complex and dangerous digital landscape while maintaining the agility needed for business success.