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IT Risk Management Best Practices in 2022

Risk Management in IT

The recent COVID-19 has accelerated digital transformation across all sectors by several years. Such a fast and dramatic shift in how companies operate and serve their customers is bound to expose organizations to unforeseen threats and potential data breaches. 

Many businesses now rely on cloud services to manage distributed teams, develop applications and deploy solutions. Reliance on cloud providers requires a proactive IT risk management strategy to protect your company’s data and IT assets.

Additionally, as more employees embrace remote work, companies must ensure their IT monitoring and management practices are structured to accommodate this growing trend. 

To develop a proactive and compelling IT risk management strategy, you must first understand the risk equation and IT risk management processes. This article will offer some guidance on the best practices you can adopt to improve your risk management procedures. 

What is Information Risk?

You’ve probably heard that data is the new oil. But this notion is being challenged, likening stored data to toxic waste. The theory goes that the more you have stored, the higher the possibility of a leak. When you do have a leak, the damage caused and the cost of cleaning up the mess are very expensive. Unfortunately, as more companies rely on more and more stored data to create long-lasting value, the risks continue to grow. 

So what is IT risk? Gartner Research poses IT risk definition as “the potential for an unplanned, negative business outcome involving the failure or misuse of IT.” 

So from the definition above, information risk involves three factors:

  1. Risks are unplanned. You cannot know what threats will affect your business in the future due to an ever-changing business environment. But you can implement mitigation measures based on industry best practices.
  2. The risk poses a negative business outcome.
  3. IT risks can be a result of failure or misuse of IT.

Evaluating the scale of information risk involves measuring the likelihood of a potential breach happening and the negative impact it will cause to your business. Knowing risk levels for all your IT assets helps you assign appropriate and effective measures.

What is Information Technology (IT) Risk Management?

IT risk management is the proactive application of processes, policies, and industry best practices to minimize technology vulnerabilities, risks, and threats. 

All types of Technology, no matter how secure they are, can cause financial and reputation damage if not managed appropriately. As such, it’s essential to prioritize IT risk management to identify potential loopholes and fix them before they cause irreparable damage. 

Whose role is it to manage IT risks? The general rule is that it’s everyone’s responsibility to minimize risks within their capacity. However, creating such a culture involves specific roles and responsibilities assigned to each party. 

The board’s responsibility is oversight, governance, and to some extent, monitoring. This means that the board of directors oversees but does not actively participate in implementing risk management practices by senior management. 

The day-to-day IT risk management activities depend on your company’s size and available resources. Large companies assign the IT risk management role to a senior executive responsible for managing IT risk and security with his team. IT risk management required dedicated technical expertise to stay on top of new threats that are continually evolving. 

Small and medium-sized companies may not have the budget to hire a full time IT risk management employee, so many will engage the expertise of a managed IT service provider to take over this role.  

IT Risk Equation

To develop an effective IT risk management strategy, you need to understand the IT risk equation. This step is critical to avoid creating mismatched strategies that do not deal with the root cause. 

The risk equation involves three components: Risk, threats, and vulnerabilities. A threat is an attacker or actor likely to cause harm or damage, while a vulnerability is a flaw or weakness that could allow harm to occur. So when you combine the two, you get a risk.

Risk = Threat + Vulnerability

For example, malware is software (Threat) capable of causing damage to your IT environment. The vulnerability (flaw) within your IT environment allows this threat to destroy your infrastructure, e.g., weak malware protection, no firewall, public VPNs, etc. 

As such, the essential goal of your IT risk management strategies is to reduce vulnerabilities because, in most cases, threats are out of your control.

However, you can assess a threat’s potential impact based on the criteria below:

  • The skill level of the actor
  • The motive of the attacker
  • The opportunity and access the attacker possesses
  • The resources and capabilities of the attacker

With vulnerabilities, the main objective is to assess the likelihood of an attacker discovering and exploiting the loopholes. How so?

  • The ease of discovering vulnerabilities – can the attacker quickly identify vulnerabilities in your IT environment? 
  • The ease in exploiting the vulnerabilities – can the attacker exploit any security loopholes with simple tools? 
  • Is it a known security loophole within your industry?
  • Are any devices running older software with known security issues?
  • Have all admin passwords been changed from default?
  • Is it easy to detect any potential exploitation? 

What is the Importance of IT Risk Management?

Understanding the importance of IT risk management helps you to safeguard your company’s employees, customers and business from being exploited by a bad actor. 

These are the benefits of implementing an IT risk management strategy:

  • IT risk management creates a secure IT environment for your employees, vendors, and customers. As a result, your stakeholders can trust your company with their personal and business data without worrying about mismanagement.
  • Increases business and operational stability while reducing non-compliance to regulations.  
  • Provides a backup plan in the event of malicious damage from attackers.
  • Safeguards your company’s reputation and customer confidence in your services. 
  • IT risk management protects your intellectual property and business secrets from competitors and harmful actors.

IT Risk Management Process

The IT risk assessment process follows a tried and tested procedure that’s proven effective in different sectors. 

These are the key steps in developing and implementing an IT risk management process:

Step 1. Identify the Risk Criteria

Developing an effective risk management strategy starts with establishing the requirements in which to identify and analyze risks. Having a well-structured framework helps your team quickly identify threats and move to the following stages of risk management.

Step 2. Evaluate Possible Vulnerabilities 

Part of a good IT risk assessment involves understanding how cyber-criminals could access critical systems and determine those that apply to the organization’s computing environment. Define potential risks, and work through your business operations, assets and policies to identify areas that could present a weak point for gaining access to your network.

Step 3. Evaluate Risk Level 

Proceed to analyze the specific risks identified in step 2, then determine the likelihood of occurrence (High, Medium Low), potential consequences, and the impact. This enables IT teams to first focus on the most critical items and establish controls for your infrastructure and applications. Remember, the risk influences business or financial performance. So your analysis should show how the risk influences your company’s growth, revenues, projects, and market share. 

Step 5. Risk Mitigation

Risk mitigation involves identifying the most severe risks and implementing tactics, processes, tools, and policies to reduce business and financial impact. Mitigation also involves implementing contingency plans that can quickly take effect in case of a breach. Applying different approaches to each scenario also improves risk mitigation. There are four different approaches you can use to alleviate risks:

  • Risk avoidance – deflects potential threats.
  • Risk reduction –reduces damage and severity from unavoidable risks
  • Risk distribution – spreads the consequences of risks to business partners, vendors, and employees
  • Risk-retention – retains a risk if the benefit outweighs the threat or damage to the business

Step 6. Auditing – Monitoring and Reporting

A sound IT risk management strategy includes routine follow-ups, monitoring, and reporting to assess their effectiveness. Your risk management efforts will not yield the desired results without regular auditing, and regular audits can identify any underlying security and safety issues.  

Throughout the steps above, open communication of expectations, roles, and responsibilities determines the success of your IT risk management practices. You can find a more detailed template for a cyber-security risk assessment on our website.

IT Risk Management – Best Practices

IT risk management best practices include regulatory and industry standards applicable within your region. Engage with IT professionals that understand your industry and the regulatory requirements to guide you on what criteria your company must meet and what extra precautions you need to take. Key components to take into account while considering the best IT practices for your company includes:

Cybersecurity and Data Protection

With cybercrimes increasing by a massive 600% due to the COVID-19 outbreak, it is critical to ensure you have the right cybersecurity measures and tools to protect your IT environment. In Canada, the government requires businesses to protect personal identification information they possess or manage. The federal legislation termed “Personal Information Protection and Electronic Documents Act” (PIPEDA) expects companies to protect employee personal information as well as personal information collected during commercial activities.  

In addition to legislation best practices, you can consider the strategies below to improve your IT risk management processes and initiatives. 

Early and Frequent Evaluation of Risks

The best time to implement a risk management plan is before any security incident occurs. Start by evaluating your current environment, e.g., firewalls, business systems (CRM, ERP, etc.), website, mobile apps, servers, routers, wireless network and improve any identified loopholes. 

Develop a Risk-Aware Culture

The best place to start enforcing change is through your leadership team. First, engage and consult management on potential vulnerabilities within their teams. Then, collaborate to develop and implement mitigation plans across the organization and train employees to identify, report and handle risks in their day-to-day activities. 

Strong Risk Management Policies

Well defined policies strengthen your objectives and provide a framework for reference that teams can use to start developing a risk management culture.

Engage External Partners

External collaborators give you a unique perspective and protect you from operational blindness. Since you have already had a good understanding of your business’s operations, you may be blind to potential threats. Involve an independent partner in your risk management activities and have them conduct vulnerability tests to gauge potential threats. 

Cultivate Buy-In

You can have a fantastic risk management proposal, but your plan will not be effective without the buy-in from relevant internal stakeholders. The best approach is to discuss how the risk assessment strategy improves the overall security of employee, company and business data, ultimately protecting productivity and revenues. It is essential to identify the risks with the potential adverse business impact any successful attack will cause. 

Factor in Scalability

As your company grows, so do the security risks. Continually review and put in place measures to adjust your risk assessment processes as the business grows to avoid being caught out. IT risk management is not a one and done exercise.

Involve All Stakeholders in Your IT Risk Management Processes

A company’s stakeholders include your clients, employees, shareholders, management, the board, and vendors. Each party has a role to play to contribute to the success of your IT risk management strategies. Therefore, ensure to communicate your expectations and the importance of their role in protecting your company.  

Don’t let potential cybersecurity threats catch you off guard and negatively affect your business. Talk to CG Technologies about our managed cybersecurity services take care of your IT security needs while you focus on your business’ growth. 

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