IT Risk Management: Strategies & Best Practices

IT Risk Management: Strategies & Best Practices

Today, information technology (IT) plays a critical role for businesses, and if it's not handled accordingly, this results in increased IT risk, and thus, increased risk for the entire organization.

It is important to identify risks to your IT systems and data, take measures to reduce or manage those risks, and develop an adequate response plan in the event of an IT crisis. Most businesses have legal obligations concerning data privacy, electronic transactions, and staff training that influence IT risk management strategies.

When you evaluate your company's IT-related risks, many factors should be considered, including security, access, data handling, and regulatory compliance management. As you create an enterprise risk management strategy, you should prioritize IT risks according to how likely they are to cause data breaches and result in non-compliance with industry regulations.

What Is IT Risk Management?

IT risk management is defined as the company's policies, procedures, and technology to reduce the threats and vulnerabilities that could arise if data is not protected. These threats and vulnerabilities can negatively impact the confidentiality, integrity, and availability of the data you collect, transmit, or store. Examples of potential IT risks include: security breaches, data loss or theft, cyber-attacks, system failures, employee mistakes, and natural disasters. Every type of IT risk can cause financial, reputational, regulatory, and/or strategic risk.

This is why it's critical to take measures to anticipate potential problems. You should establish a clear strategy for information security risk management and put it into action to protect your systems and data from all known threats. Your goal is to minimize or mitigate their negative impact. This strategy serves as a guideline for IT security teams to implement technical controls such as: firewalls, intrusion detection, multi-factor authentication, etc. Your IT security team needs these controls to help avoid or reduce the impact of a catastrophic data breach.

It's also essential to mitigate third-party risk related to IT systems and data. That's why vendor risk management teams must work with vendors, suppliers, and other third parties critical to business operations. They must perform a vendor risk assessment to ensure that potential vendors have reasonable information security policies in place. Besides this, they also need to consistently provide ongoing monitoring during the entire vendor lifecycle. These combined efforts help ensure that a company doesn't suffer from the risks they're trying to stay away from.

Managing third-party IT risks involves a lot of work, but you can improve this process and save time using automation tools like START.

Our tool helps reduce the workload of vendor management teams and allows you to streamline the risk assessment and vendor onboarding process.

With START, you can easily adjust controls and questionnaires to different vendors and establish a consistent vetting process for new vendors and suppliers. You'll be able to stay in control of all risks, even if you have to manage thousands of partners with a tiny team.

Key Steps in Information Security Risk Management Process

The end goal of the IT risk management process is to treat risks under a company's overall risk tolerance. You shouldn't expect to eliminate all risks; rather, you should seek to identify and achieve an acceptable risk level for your company.

Let's take a look at the essential steps in the information technology risk management process. Follow these steps to manage IT risks effectively:

  • Identify and categorize your assets – identify locations where you store your data and analyze data types.
  • Identify risks – determine the nature of potential risks and how they relate to your business.
  • Analyze the risks – determine how serious each risk is to your business and prioritize them; carry out an IT risk assessment.
  • Choose an IT risk management strategy to deal with each specific risk to protect your assets – accept, transfer, mitigate, or refuse the risk.
  • Continuously monitor your risks – review processes and procedures you use to assess threats and manage new risks.

Technology Risk Management Strategies

Before deciding how to manage the technology risks best, you have to determine the causes of the technology risks you've identified. It would be best if you also discussed how each risk impacts your business and thought about the possible solutions to manage or prevent it. The most common strategies for treating risk are avoidance, mitigation, transfer, and acceptance.

The most straightforward technology risk management technique a company can take is to avoid risks when possible. For example, you can decide to stop collecting specific types of personal data if they are not required for your business to operate.

When a risk is unavoidable, or when the cost of avoidance is too high, companies can manage risk through mitigation. They can take measures to minimize the probability and the impact of the risk occurring. For example, you can use the principle of Least Privilege to limit the number of employees who have access to sensitive data and reduce the risk of data leaks and accidental data deletion. You can also establish a physical, technical, and organizational control system that can help mitigate risks.

Sometimes, companies choose to transfer an IT risk to an outside party. For example, cyber insurance transfers the risk of financial loss resulting from data breaches to an insurance provider. And data storage companies can help organizations reduce the risk of business interruption due to data loss by providing off-site data backups.

Finally, companies can choose to accept some IT risks that can't be avoided. An IT risk can be accepted when a potential loss caused by it will be lower than the costs of mitigating it.

Information Risk Management: Best Practices

An effective information risk management program should use a combination of different policies and strategies. Most importantly, a company's security team should continuously monitor IT risks ensuring that their efforts keep up with the evolving threat landscape.

Here are some of the best practices when managing risks in IT:

  • Continuously monitor your IT environment to detect weaknesses and prioritize your remediation activities.
  • Monitor your third-party risks to get a better understanding of the cybersecurity posture across your ecosystem.
  • Create a compliant IT risk management program and monitor and document your activities to assure internal and external auditors.
  • Have a clear channel to communicate risks throughout your organization because it allows you to identify risks quickly and respond effectively to them.

Final Thoughts

IT risk management is becoming an increasingly important part of the overall risk management program for any organization. Companies need to consider IT risk, identify potential internal and external threats and vulnerabilities, perform a risk analysis, and establish strong security controls to meet their business objectives.

Vendor risk management is also a core component of an overall risk management program. It's critical to periodically review your vendors to identify and address risks that they pose to your products and services. You should follow the same process for assessing internal risks and use automation tools like START to increase efficiency.