Fact: Where there is Information Technology, there’s Risk.
Why: Increasing reliance on cloud computing, a greater focus on digital transformation, and an ever-broadening threat landscape.
Fact: IT health affects the organization’s health.
Why: IT is now a critical strategic function that affects every aspect of business operations and decision-making.
A data breach or other cyber event can be devastating for your organization, so it’s critical to understand, implement and optimize IT Risk Management (IRM).
What is IT Risk Management?
IT Risk Management refers to the potential that a threat (or threats) could negatively affect your data or technology assets, impact business continuity, cause financial damage, or erode your business value.
IT Risk Management involves the technologies, policies, and procedures that can help you:
Minimize threats from malicious actors, or non-malicious insiders or outsiders
Reduce the vulnerabilities that impact the confidentiality, integrity and availability of data
Effectively manage the potential consequences of an adverse cyber event
Thus, IT Risk = Threat x Vulnerability x Consequence
This is the IT Risk Equation.
To manage, control and minimize IT risk, a robust IRM strategy and process are essential.
IT Risk Management: Step-by-Step Process
To protect your business-critical data and IT assets, you need a comprehensive, robust, flexible and agile IRM process.
1. Identify risks
It’s impossible to manage or mitigate risks without first identifying them. This might be difficult if your organization is geographically dispersed and/or if your data resides in multiple locations (e.g. on-prem and cloud).
However, you can accurately identify risks by following these practices:
Conduct a high-level analysis of your business strategy and critical areas that could be impacted by IT risk: financial, operational, technological, legal/compliance-related, etc.
Ask: What could go wrong in each of these areas? How could they introduce (or increase) risk?
Leverage cause-effect diagrams to clarify causes and understand their effects
Analyze past incidents, near misses and trends to identify potential problem areas
Consult experts like Packetlabs to help you identify, quantify, and prioritize risks
2. Analyze and assess risks
Common IT risks include vulnerabilities in:
Equipment failures or downtime
Non-compliance with industry standards or legal regulations, e.g. PCI-DSS, HIPAA, GDPR, etc.
Once you identify the IT risks relevant to your organization, analyze them to understand their potential impact. Is the risk small enough to be ignored? Or is it severe enough to potentially bring the business to its knees?
In addition, a risk may appear to be small in terms of its impact on one area of your business but could be a significant problem for other sites. Make sure to analyze each risk in the context of the larger organization to understand these interconnections.
3. Prioritize risks
Which risks pose the most significant danger to your organization’s business continuity, financial position, and reputation? Rank them in order of importance and potential impact. Use the IT risk equation to quantify each risk, and guide your management/mitigation strategies.
4. Plan and implement risk response
Here’s where you formulate your response to each risk to minimize its negative impact.
There are several IRM techniques to help you deal with risks and protect your organization:
Risk avoidance: E.g., can you avoid the risk of a data breach if you stop collecting PII data?
Risk mitigation: Can you minimize the impact of an unavoidable IT risk, say by strengthening physical or technical controls (firewalls, data encryption, automated backups, etc.) or by leveraging IT risk frameworks like COBIT, COSO or FAIR?
Risk transfer: Cyber insurance is an excellent way to transfer risks that you cannot realistically avoid or mitigate.
Risk acceptance: Accept the risk but keep it documented and revisit it annually.
You can choose any or all these techniques depending on the type and potential consequence of risks. Then you can take appropriate action if a particular risk becomes a reality. It’s also a good idea to create contingency plans, business continuity plans (BCPs) and data recovery plans.
5. Monitor and review risk response
IT risks to your organization will never completely go away, so IRM must be a continuous and iterative process, not a one-time or occasional initiative. Continuously monitor your risks, and adjust your IRM strategy and tactics—Monitor your IT environment and any changes that may introduce new risks. Also, keep an eye on your supply chain to stay safe from SolarWinds-type attacks.
IT risk management affects your entire organization, so you must prioritize it with a robust IRM strategy. Updated IT policies, a cyber-educated workforce and strong leadership should be included in this strategy to mitigate threats, ensure operational continuity, and keep your company ahead of bad actors. Penetration testing, security QA and application security testing should also be part of your IRM. If you’re not sure of the ROI of these activities, contact Packetlabs, and we’ll guide you.