Risk Management Definition
IT risk management covers all positive and negative effects that come with the owning, operating, and integrating IT as part of a larger business. This includes managing the level of risk the business is exposed to through its setup, activities, and potential events or incidents.
What IT Risk Management ISN’T
Unfortunately, IT risk management is not as simple as purchasing a product or putting a single policy in place that will fix everything; it is an ongoing process of managing the risks unique to your business and analysis of how it operates.
What are IT Risks?
Businesses are increasingly reliant on information and information processing systems for which various events could disrupt and cause harm to the business. Here is a list of 36 types of technology risk, for a full breakdown visit simplicable.
|· Architecture Risk
· Artificial Intelligence Risks
· Asset Management Risk
· Audit Risk
· Benefit Shortfall
· Budget Risk
· Change Control
· Compliance Violations
· Contract Risk
· Data Loss
· Data Quality
· Decision Quality
· Design Debt
· Facility Risk
· Infrastructure Risk
· Innovation Risk
|· Integration Risk
· Legacy Technology
· Operational Risk
· Partner Risk
· Physical Security
· Process Risk
· Procurement Risk
· Project Risk
· Quality Risk
· Regulatory Risk
· Resource Risk
· Security Threats
· Security Vulnerabilities
· Single Point Of Failure
· Strategy Risk
· Technical Debt
· Transaction Processing Risk
· Vendor Risk
It’s hard to determine the value of IT assets, which makes it difficult to budget and accurately compensate and plan for IT risk. For example, replacement of a lost email server may cost a couple of thousand dollars but the contents of that server (confidential or operational emails), may amount to tens of thousands – if not millions – of dollars in productivity.
IT Risk Management Process
Your risk management processes should be part of your Strategic IT Plan; it should be:
- A documented process that is frequently revisited
- In strong alignment with business objectives
- A balance between the costs and benefits
IT risk management is effective when it is factored into the large-scale plan for the business, considering the direction, costs, and day-to-day operations of the business.
IT risks are managed according to the following steps:
- Evaluation: Risks are defined by likelihood of their happening and potential impact
- Mitigation: Policies and other measures are implemented to reduce potential impact of those risks
- Analysis: Highlight and re-evaluate the potential risks affecting the business and effectiveness of countermeasures put in place
After a time, the process will repeat, as the risk profile of the business should be continuously monitored to maximise business continuity.
Benefits of IT Risk Management
The goal of risk management is to prepare for potential risks or events so that a business can take the smallest amount of risks possible that enable it to further its primary objectives.
Risk management is a proactive process because risk cannot be completely eliminated. It can, however, be transferred to a third party such as insurance, reduced through internal control, or avoided by exiting areas or activities of substantial risk.
The benefits of an effective IT risk management plan include:
- Saving valuable time & profits
- Creating a secure environment for staff and customers
- Reducing legal liability
- Protecting data and assets from harm
- Saving on unnecessary insurance premiums
- Increasing business’s ability to capitalise on opportunities
Who’s responsible for managing IT risks?
IT risks falls under your IT Strategy which should be engaged by all key business leaders; it is not just the responsibility of the IT department. IT risk involves legal issues, human resources practices and policies, operational processes, and technical setup.
Unless the C-suite tackles the challenge together, IT risk can’t be managed effectively. While each of the key business leaders controls various parts of the problem, many aren’t aware what role they play, and often no-one has full responsibility.
Many businesses find the solution in outsourcing their IT through managed services, giving them more reliable performance and predictable expenses. A managed service provider who can help you create an IT Strategic Plan will be the most efficient integration and offer the greatest value for your IT risk management needs.