Standing in the race of uninterrupted and nonstop changing technology, enterprises need to make massive changes to adapt and succeed. This transformation is driven by technologies fusing the physical, digital, and biological worlds. While the resulting shifts and disruptions introduce great promise, they also present great dangers. One of these dangers is IT risks.
The Current IT Risk Landscape
Today, data is more precious than software and even hardware in some cases. Bulks of data are produced daily – millions of transactions are incurred and billions in revenue flow out of the online marketplace alone.
Also generated are approximately 300,000 new malware threats. Moreover, there is a hacker attack every 39 second. In addition to putting personal and private information at stakes, these risks trigger and shake confidence in IT security and integrity, reduce credibility, and make portfolios vulnerable and prone to downfall.
The continuity and growth of business requires serious attention and focus on the relation of IT and business, and alignment to the goals, objective, vision and mission of the organisation. Therefore, like risk management is essential for business, it is as important for IT risks. This is because one thing is constant: change. In order to comply with these innovations, managing IT risks is vital.
What is IT Risk Management?
IT risk management corresponds to the implementation of risk management techniques and principles in order to manage information system of organisation. It focuses on managing the ownership, involvement, people, resources, hardware, software, vendors, operations, working, influence, process, innovation, and use of IT as a part of enterprise. As a result, it would lead the enterprise to deliver value to stakeholders.
IT Risks to Consider
IT risks can belong to information, IT & Cybersecurity, IT Service Management, Business & ICT Continuity, and IT Portfolio / Program / Project Management areas. It is important to understand these to ensure timely mitigation. The following list highlights specific IT risks:
- Architecture Risks
- Change Control
- Compliance Violation
- Contract Risk
- Data Loss
- Decision Quality
- Knowledge Management
- Facility Risk
- Infrastructure Risk
- Innovation Risks
- Vendors Risk
- Physical Security Risks
- Procurement Risks
- Project Risks
- Product Risks
- Security Threats
- Points of Failure
- Regulatory Risks
- Resource Risks
- People Risks
IT Risk Management Methodologies
Organisations resort to various risk management standards, frameworks, and methodologies to manage their risks. There are no specific requirements or recommendations to follow a particular risk management methodology.
Regardless of the method used, the outcome of the risk management process must be to bring organisational risks up to an acceptable level. Some of the popular risk methodologies include NIST SP800, Octave, CRAMM, ISO 27005, and ISO 31000.
The Ultimate IT Risk Management Process
A risk management process refers to the steps and tasks that should be covered in order to handle risks successfully and, in turn, minimise its effects. The following risk management process will surely allow you to find risks that are critical for the survival of business in the age of information and innovation, and ultimately enable you to utilise technology that aligns your business to the flow.
Step 1: Identify the Risk
The first and foremost step is to identify risks that possess the potential to affect the enterprise’s IT environment and prioritise them based on their intensity. The latter takes into consideration the objectives of the business, thus enabling the organisation to plan and organise an appropriate methodology for mitigating risk.
This step also includes informing stakeholders about the diagnosed risks via a Risk Management System. The discovery of risk would trigger the risk management team to look for solutions and devise a plan to minimise the likelihood of risk.
Step 2: Analyse the Risk
Once the identification of risk is done, it needs to be analysed. The scope of risk must be determined, and its effects must be considered to create an effective plan. It is essential to understand the different factors in the organisation and risk. There are risks so severe that they can bring a business down to its knees.
This analysis can be done using technology and business intelligence solutions which facilitate the depth, pictorial, and graphical analysis over bulk of data. With these, a wide range of conclusions can be drawn with ease and in a timely manner.
Step 3: Examine the Solutions
Risks needs to be prioritised based on their severity and the effects they introduce to the enterprise. It is a good practice to create a scale which shows risks according to their severity. The least severe risks are those that have a small effect on the performance of your business.
A Risk Management solution has different categories. A risk that may cause little inconvenience is categorised with a low tag. Meanwhile risks that can bring heavy loss are tagged higher based on the intensity of their consequences. This step falls under the domain of risk quantification. Just a single higher priority risk is enough to cease the organisation if not taken seriously.
Step 4: Implement Solutions
All the identified risks need to be eradicated or removed in order to retain the enterprise’s position in the market. This is done by involving experts on the domain a risk belongs to.
For solutions, all relevant stakeholders need to be notified about the risk and the methodology used to minimise its effect. Upper management needs to keep a close eye on the activities taking place to eliminate risks.
Step 5: Monitor Results
Risk management is an ongoing, iterative process which needs to be revised regularly. The surveillance of activities against risks is the responsibility of the management and the system. All outgoing and incoming of data must be monitored carefully to maintain the balance, availability and integrity of information.
An organisation needs a framework or set of standards in order to keep the process of risk monitoring ongoing and, ultimately, de-risk the business. By listing potential risk factors, businesses can avail golden opportunities and take appropriate substantial steps.
The Process of Risk Treatment
Risk mitigation is an approach selected by senior management to identify what best mitigates a risk. Risk mitigation can be ensured by any of the following options.
- Risk Assumption – To accept the potential of identified risk and keep IT operating systems running, or to apply solutions to minimise the risk level
- Risk Avoidance – To avoid risk by removing the causes of potential risks
- Risk Limitation – To limit the risk by applying controls which lower the adverse impact of a threat’s exercising the vulnerability
- Risk Transfer – To transfer the risk by taking other measures to cover the loss, such as buying insurance
The Prominent Role of IT Risk Managers
A corporate IT risk manager is a multi-disciplinary professional with an understanding of information systems and internal business processes and financial instruments. This professional might have a background in computer science, business management, finance, insurance or actuarial science.
An IT risk manager may suggest solutions to a corporation to protect its assets. For instance, they may recommend investing in methods and tools which secure the system as well as the availability, confidentiality, and integrity of data. Hence, this individual now has a much bigger role to play than ever before.
The Bottom Line
To ensure the robustness of an enterprise despite the cutthroat competition, risk management is an essential approach that must be applied throughout the entire system and cover all the internal and external aspects of the organisation.
This process empowers the enterprise to deal with its future endeavors in a confident manner. Moreover, it strengthens decisions, presents them in various verticals, and determines flaws and drawbacks that can ruin the business. Therefore, it allows the enterprise to remove it.
With our decades of experience, we can help you assess your enterprise’s IT risks and propose ways to manage them. Please do not hesitate to get in touch so you can prepare better for the latest threats which may come your way.