How to Standardize Your IT Risk Management to Avoid Drowning in Alerts?

Octobits Blog – IT risk management identifies, assesses, and prioritizes risks to an organization’s digital assets and operations.

The main goal of IT risk management is to mitigate, control, and manage the likelihood or impact of those risks.

IT risk management becomes important because we rely deeply on our computers, networks, and software.

While technology helps us streamline processes and increase efficiency, it exposes us to new vulnerabilities.

IT risk management helps us pinpoint potential issues like cyberattacks, hardware failures, or even simple human errors.

Importantly, it gives us a framework for deciding how to deal with those risks – whether it’s investing in better security, setting up backup systems, or taking other protective measures.

So hang on and get ready to strengthen your business’s cybersecurity posture.

What Is IT Risk Management?

IT risk management is a comprehensive and strategic approach to safeguarding an organization’s information assets from a spectrum of potential threats.

This includes everything from the computers your employees work on, to the networks they use, the software that runs your business, and the sensitive data you store.

The spectrum of threats that IT risk management seeks to mitigate is diverse.

They range from external threats like cyber-attacks (e.g., malware, ransomware, phishing) and data breaches to internal threats such as system failures, software bugs, or human error.

But IT risk management isn’t just about cybersecurity. Actually, it is a broader strategy for dealing with any potential disruption caused by technology.

IT risk management is vital for several reasons. It helps prevent attacks by proactively identifying security weaknesses before they can be exploited.

It safeguards your data, including sensitive customer information, financial records, and intellectual property.

Onspring, business process automation software, and Leverage Corporation, a CTO-as-a-service provider, are some of the study cases we need to see.

Leverage Corporation faced challenges in managing the intake from commercial vulnerability scans for their global customer base.

Using Onspring, a platform for managing IT assets, contracts, and vendors, they developed a custom application to launch a new vulnerability management service.

This solution enabled them to ingest vast amounts of scan data and visualize critical information, such as vulnerability types, severities, and locations.

Components of IT Risk Management

While each company’s approach to IT risk management will be tailored to its specific needs, most robust frameworks share some common building blocks.

Risk Identification

The foundation of any IT risk management strategy begins with risk identification.

You meticulously catalog all the valuable digital assets your organization relies upon – hardware, software, networks, and the data they store.

Then, you need to apply critical thinking and brainstorm every possible threat these assets might face.

Effective risk identification requires a thorough understanding of the organization’s IT infrastructure, including hardware, software, networks, and data.

Tools such as vulnerability scanners, threat intelligence platforms, and internal audits are commonly employed to assist in this process.

Risk Assessment

Once you have a list of potential threats, it’s time to separate the minor inconveniences from the potential catastrophes.

In this stage, you carefully analyze each risk, considering how likely it is to occur and the severity of the consequences.

Risks with high potential impact and high likelihood of occurrence are typically prioritized for immediate action.

Risk assessment methodologies can vary but often involve qualitative analysis, such as expert judgment on risk severity.

Or, you can rely on quantitative analysis, such as calculating the potential financial loss.

Risk Mitigation Strategies

Here’s where you put your plan into action and decide on a course for each risk you’ve identified. There are several approaches:

Avoiding a risky activity altogether
Reducing the risk through security measures or training
Transferring some of the risk via insurance
In certain cases, accepting a low-level risk and focusing on a strong recovery plan.

The risk assessment should inform the choice of mitigation strategies. This aims to reduce the likelihood of the risk occurring or minimize its impact should it occur.

Moreover, a solid plan helps avoid costly downtime due to system failures, keeping your operations running smoothly.

IT risk management also supports compliance with industry and government regulations regarding data security and IT operations.

Finally, and perhaps most importantly, it protects your reputation by minimizing the chances of major data breaches or system outages that could tarnish your company’s image.

Monitoring and Review

IT risk management isn’t a “set it and forget it” situation. Please note that the landscape of cybersecurity threats and the technology you use are constantly evolving.

This ensures that new and evolving risks are identified promptly and that existing mitigation strategies remain effective over time.

Monitoring can involve regular security assessments, compliance audits, and automated tools to detect and alert potential security incidents.

Communication and Reporting

Finally, remember that IT risk management doesn’t happen in a vacuum.

Transparency and clear communication with stakeholders – from employees and company leadership to partners or clients – is vital.

Regular reporting demonstrates accountability, builds trust, and helps you get the support and resources needed for effective security measures.

Plus, having well-established communication channels ensures everyone knows their role if a major incident does occur, leading to a much faster and more effective response.

Common IT Risks

Of course, when talking about IT risk management, we need to focus on what kind of IT risk is out there.

Gaining a deeper insight into these common threats can guide the development of a more robust IT risk plan.

First and foremost are cyberattacks, which come in various forms like hacking, malware, phishing scams, and targeted data breaches designed to compromise systems or steal sensitive information.

Beyond cyberattacks, even well-maintained technology isn’t perfect.

You have potential issues in hardware failures like server crashes, hard drive malfunctions, and the deterioration of aging equipment.

Software errors like bugs, glitches, and unpatched vulnerabilities can similarly lead to downtime and create openings for cybercriminals.

It’s also important to remember that human error is a significant risk factor.

Employees are often the weakest link due to accidental data deletion, misconfigured settings, or phishing scams.

Targeted employee training and clear IT policies go a long way in combating this common type of risk.

Lastly, natural disasters such as fires, floods, earthquakes, or power outages can cause catastrophic damage to IT infrastructure.

One of IT risk management in addressing these common IT risks is capacity planning.

This involves ensuring that IT infrastructure is resilient to threats and scaled appropriately to meet the organization’s operational demands.

Kindly see “How Capacity Planning Can Help Your Business Avoid Costly Downtime“ for more on how IT risk management impacts capacity planning.

What are the 5 Types of Risk Management?

Five types of risk management allow businesses to adopt a multifaceted approach to addressing IT risks. Let’s break down these five common ways to manage risk.

Risk Avoidance

This is the most straightforward approach: the threat disappears if you can eliminate a risky activity entirely.

For example, if using a particular software or technology introduces unacceptable vulnerabilities, discontinuing its use would be a case of risk avoidance.

This method is particularly effective for high-risk threats that do not align with the business’s core needs or strategic goals.

Risk Reduction/Mitigation

In most cases, eliminating risk isn’t feasible. The risk reduction makes the risk less likely to happen or less severe if it does.

The mitigation approach is more extensive and includes many IT security measures: firewalls, antivirus software, strong password policies, backup systems, employee training, etc.

Training employees on security best practices also fall under this category, as human error is a significant risk vector.

The goal here is to minimize the impact of risks to a manageable level rather than eliminating them entirely.

An example of a technological solution that fits into this category is software-defined networking (SDN).

With SDN, you enhance network management and agility, allowing organizations to respond dynamically to evolving IT risks.

You can read more details about SDN in ‘Software-Defined Networking: Guide to Simplify Your Network Complexity.’

Risk Transfer

When you can’t fully avoid or sufficiently reduce risk, sometimes you can partially transfer it to another party.

Cybersecurity insurance, for example, can provide financial protection against the costs associated with data breaches or cyberattacks.

Outsourcing certain IT functions to vendors can also transfer the risk associated with those operations, provided the vendors have strong risk management practices themselves.

This approach doesn’t eliminate the risk but spreads its potential impact across more stakeholders.

Risk Acceptance

In some cases, the cost of avoiding, mitigating, or transferring a risk may outweigh the potential damage it could cause.

In this case, you accept the risk but should still have processes in place to handle the consequences if it occurs. Accepting risk requires informed, justifiable decisions.

This decision should be based on thoroughly analyzing the potential impact versus the resources required to address it.

Risk acceptance is often applied to low-level risks, where the effort and resources needed for other management strategies are unjustifiable.

Risk Exploitation

This is the most unconventional and high-stakes strategy. In rare circumstances, a company might capitalize on a risk for potential gain.

This could involve adopting an emerging technology that competitors are hesitant to use despite the risks because the potential market advantage outweighs the possible downsides.

For example, a software firm might deliberately release a product with known minor bugs to beat competitors to market.

This involves balancing risk against potential rewards and requires very careful assessment.