The Importance of IT Risk Management

Identifying and assessing IT risks can be time-consuming. It is important that systems are in place to continually monitor and detect vulnerabilities so that they can be addressed quickly.

IT risk management helps focus governance, security and compliance investments on the areas that contribute to mission success. The process begins with identifying the organization’s critical business processes.

1. IT Security

IT security involves protecting information from unauthorized access, use, disclosure, disruption, or destruction. It includes technical measures like implementing software patch management procedures, firewalls, and antivirus applications, as well as organizational processes such as password policies and user authentication. This also involves encrypting data so that it can only be decoded by authorized users with secret keys. Information security also includes adhering to industry and government regulations that protect consumer privacy.

The first step of IT risk management is to identify potential threats and vulnerabilities to your organization's information and assets. This can be done manually or with automated tools that scan for known weaknesses and alert security teams to possible threats. This can be time consuming and difficult, but is essential to effective IT risk management.

Once risks are identified, the next step is to develop and implement IT security controls. A control is either a process that fully fixes an identified vulnerability or threat (remediation), or a set of "safety net" procedures that indirectly address a risk (mitigation). For example, you might create a new policy to automatically remove terminated users from a particular application after their last login, as an indirect way to mitigate the risk that those users will continue to have access to critical systems.

A third type of mitigation is transferring a risk to a third party or sharing it with another entity. This can reduce the impact of a risk and free up resources to focus on more important areas. For example, a cloud vendor might help mitigate the financial risk of your CRM system being out of commission by providing offsite data backups.

Lastly, the fourth and final step of IT risk management is to accept some risks. This may be appropriate if the cost of mitigating or transferring a risk is more than your organization can afford, or if avoiding a risk would impact your company's strategic outlook. For example, if your CRM system is a key part of your sales department's ability to function, then it may be necessary to pay for a backup solution to keep the information online if the primary system goes down.

2. Business Continuity

There’s an old adage, “Hope for the best and plan for the worst.” Businesses need to have a business continuity plan in place so that they can remain open and operational during even the most serious physical or technological disasters.

A good business continuity plan identifies the most important aspects of a company’s operations and what steps must be taken to maintain them in the event of a disruption. It includes a list of critical business functions and a timeline for recovering them, the ability to access offsite backup data, emergency communication strategies, and chain of command responsibilities for addressing external events. A plan should also include a change log for updates.

As a best practice, it’s a good idea to test the business continuity plan on an ongoing basis. This can be accomplished through role-playing sessions, simulations or other exercises several times a year. Training employees on the plan will increase their confidence and make them more capable in the event of a crisis.

When creating a business continuity plan, it’s a good idea to interview personnel who have gone through a disaster in the past. They’re often willing to share their war stories and describe what worked and didn’t work for them.

A business continuity plan should include a risk management process that defines the probability of each identified threat or vulnerability occurring and weighs this against the impact on the organization. It should also consider the cost of implementing an effective remedy. There are three ways to mitigate a risk: by completely fixing it (remediation), by transferring it to another party, or by accepting it if the time and costs of solving it would be prohibitive.

A business continuity plan should address all identified risks, even those that are considered low probability and high impact. This can be done through mitigation, transference or by developing compensating controls. For example, a server may have an end-of-life operating system that will no longer receive security updates. The business could transfer the OS to a newer server, which can be used to store non-sensitive data and then migrate the sensitive data to that server.

3. Risk Assessment

An important step in any Management IT services plan is identifying and analyzing threats and vulnerabilities that could impact your company’s information. This involves examining hardware, software, networks, and data flows within your organization. For example, if you have confidential employee records stored on an external server that can be accessed by hackers, you would need to examine the threat to determine the extent of potential damage and identify any additional steps necessary for remediation.

An effective way to perform a risk assessment is to bring together stakeholders from various departments to discuss the risks they face. By doing so, you can create a consensus view and record it on a visual risk map. Additionally, you can establish action plans and assign an owner to each major risk.

During this process, you should collect a list of all your valuable assets and assess the likelihood that a threat can impact them. Typically, you will use a qualitative system to rate the risk of an asset, such as high, medium or low. Identifying all your assets can take some time, so you may want to classify them based on predefined criteria, such as legal status and business importance.

Once you have a complete list of your assets and their associated risks, it’s time to analyze your existing controls. These controls can be either technical or non-technical and can prevent a threat from exploiting a vulnerability or lessen the impact of a threat. For instance, a control could be a firewall that blocks incoming and outgoing traffic or a multi-factor authentication (MFA) protocol for accessing sensitive information.

Some risks are simply too great to take and need to be eliminated, such as the possibility of natural disasters affecting your data centers. Other risks can be transferred to a third party, such as insurance policies that cover financial losses or partnerships with vendors that have the ability to assume the risk. Finally, you can also reduce the chances of a threat occurring by implementing compensating controls. For example, if you are worried that terminated employees might continue to have access to a key application, you can implement a quarterly access review process.

4. Monitoring

Risk management is a continuous process that requires regular reviews and updates. The process involves identifying risks, assessing them, and then developing strategies to mitigate them. This helps prevent risks from becoming actual incidents that threaten the company’s assets or information.

Risk assessment includes examining the types of data your organization has, how that information is collected and stored, and the various locations where it is located. It also examines the threats that could cause data to be compromised or lost, including a malicious actor using stolen information to make money on the Dark Web or a natural disaster destroying physical records.

It also considers the costs of a loss and the impact on the company’s reputation. Stakeholders, including those who would be impacted by the loss, should also be included in the process. For example, if the loss of the customer relationship management (CRM) system would have a significant impact on sales, the head of your sales department should be involved in this process. It’s important to gather as much data as possible so that stakeholders can provide insight into a potential risk.

Once you’ve completed the risk assessment, it’s time to treat and monitor your identified risks. Identifying the appropriate response can be as simple as adding a buffer to an initiative or as complex as changing your business processes to avoid risk.

For example, a buffer is often added to projects that require specialized hardware or software. This ensures that the project stays within its intended scope and reduces the risk of unforeseen issues. A similar approach might involve spreading your risk by storing duplicate copies of critical information in multiple locations to lessen the impact of a loss to property or people.

Some risks can be completely eliminated or minimized by implementing robust physical, technical and operational controls. These include the use of biometric security scanners to protect tangible assets, installing antivirus and firewall software, and incorporating security into development and production processes. In some cases, it may be necessary to transfer or share a risk to a third party. For example, a cloud vendor might provide off-site backup services for your business, helping to mitigate the risk of a disaster that could cause data loss or disruption of operations.

Identifying and assessing IT risks can be time-consuming. It is important that systems are in place to continually monitor and detect vulnerabilities so that they can be addressed quickly. IT risk management helps focus governance, security and compliance investments on the areas that contribute to mission success. The process begins with identifying the organization’s critical…