IT Risk Management: Identifying, Assessing, & Mitigating IT-related Risks

Information risk or IT risks refer to any potential threats or vulnerabilities that can adversely impact any business’ information technology infrastructure, data, intellectual property and operational capabilities.

IT risk management is identifying, assessing and controlling such potential IT threats and vulnerabilities to minimize the impact, ensure improved resilience towards cyberattacks, stabilize business operations, and safeguard sensitive organization & customer data.

The cost borne by the victims of cyber-attacks or IT risks are limited to the investment needed in setting up ITRM (IT Risk Management) best practices and processes and the time it takes to recover from the loss of data, infrastructure, time and other such aspects.

Stats Showing the Importance of IT Risk Management in Today’s World

IT Risk Management Stats as per Statista –

• Cyber incidents were the leading risk to global businesses in 2023, as per a survey conducted by risk management experts in late 2022
• The Global Cybersecurity Market is forecasted to grow to $538 billion by 2030
• In 2022, small companies in the United Kingdom invested over 187 million British pounds in the cybersecurity sector. Mid-scale businesses spent 93 million, whereas micro-businesses spent around 22 million
• The cost of taking corrective actions against cyber-attacks in the UK totalled 11,00 British Pounds across all businesses in 2023

Information Risk Categorization – Types of IT Risks and Level of Risk Control

Information Risks are generally categorized as – Cybersecurity Threats, Operational Risks, Compliance Risks, Data Risks, Third-Party Risks, Emerging Technology Risks, Human Factor Risks, Financial Risks, Legal and Litigation Risks, and Environmental Risks. Such categorization can help in the Risk Identification process, allowing cybersecurity experts to match the right IT risk management solutions, including Risk Management Tools and Software, to your project.

Here is a quick explanation table to get a basic idea about different types of Information Risks –

What is IT Risk Management? Benefits of Implementing IT Risk Management Solutions

IT Risk Management, often regarded as ITRM, applies best risk management practices to manage IT security vulnerabilities and risks and reduce their impact on your IT infrastructure, sensitive data and other business processes. It focuses on implementing various IT risk management methods to mitigate, manage and foresee potential IT threats.

There are essentially four broad categories or processes in an effective IT risk management process – Risk Identification, Risk Assessment, Risk Mitigation, Risk Monitoring and Reporting.

You can also leverage some of the most established IT Risk Management frameworks to ensure comprehensive coverage of your IT risk management efforts. In the coming sections, we will discuss the processes and these risk management frameworks in greater detail.

But before we get to that, let’s address Why IT risk management is critical. What is its purpose?

Benefits of Investing in IT Risk Management for Businesses in 2024

As we already saw, businesses across the globe are investing heavily in IT risk management practices. Also, since almost all business practices and industries depend heavily on technology, the significance of effective IT risk management practices has increased tremendously. From data breaches to cyberattacks and regulatory compliance, businesses need to safeguard their digital infrastructure proactively. Moreover, implementing IT risk management best practices also helps improve business efficiency and other benefits such as –

Data Protection

IT Risk Management helps safeguard sensitive data from unauthorized access, data loss, security breaches and more. This helps protect and uphold the integrity and confidentiality of sensitive information.

Compliance Adherence

Proper IT risk assessment and management ensures compliance with relevant industry regulations, data protection laws and security standards, which helps reduce the risk of penalties and legal consequences.

Cost Reduction

Proper IT security assessment can help identify key problematic areas in your business processes that might be the most vulnerable to threats and attacks. Proactively finding such loopholes and weak spots can significantly prevent costly IT incidents, reducing the chances of unforeseen and expensive repairs.

Reputation Management

Effective Information Security Risk Management protects a company’s reputation by preventing data breaches and other IT-related attacks like man-in-the-middle, cross-site scripting, etc. This helps maintain trust and reliability with other stakeholders regarding clients, partners and others.

Data-Driven Decisions

Effective IT risk mitigation strategies provide significant insights regarding IT-related decisions that help the top-level management make data-driven decisions based on organization goals and focus areas.

Supply Chain Resilience

If your business has a supply chain, your data or business processes can be compromised due to different vendors involved in the supply chain if any of their data gets compromised. Hence, effective Vendor IT Risk Management processes help to reduce business disruptions significantly, ensuring a smoother flow of business processes.

Steps of Implementing Information Security Risk Management Process

IT risk management is a systematic process that follows an overall flow of identifying, assessing, and monitoring potential risks associated with any organization’s IT infrastructure and business operations. Let’s break down the process of implementing a comprehensive, practical and fully covered IT risk management process –

Step 1 – Identifying IT Security Vulnerability Points (Risk Identification)

How to Conduct a Successful IT Risk Identification Analysis?

Just like an effective healthcare diagnosis and identification of the root cause that’s causing the problem, finding the vulnerable areas in your IT infrastructure and digital processes is the first step towards a successful IT risk management effort. Here are a few steps you can undertake to ensure complete coverage of your IT infrastructure inspection –

• Make a list of all IT asset inventory – hardware, software, systems and sensitive data that needs to be protected. This will be the base of your IT security assessment
• Next, identify all entry and access points to all the networks, systems and applications. Exploiters can use such places as entry points for potential attacks. Hence, you need to monitor and safeguard these points proactively
• Assess the effectiveness of your current cybersecurity risk assessment processes. These could be firewalls, accessibility controls, data encryption and other forms. Understanding gaps in your IT risk management strategy can help improve those focus areas
• Review the system configurations and software security settings. Correct or optimize any locations that are not properly established
• Scan your IT infrastructure, codebases, websites and systems for security vulnerabilities using automated vulnerability scanner tools
• Review previous incident reports and learn lessons from earlier weaknesses and attacks
• Interview the employees to understand any possible workflow gaps and better the chances of human errors or malicious attempts by someone with system access

Also Read : How to Reduce Risk of Outsourcing IT Services?

Step 2 – Risk Ranking and Prioritizing (IT Risk Assessment)

What is a Risk Analysis Assessment Matrix?
You can create a Risk Assessment Matrix such as –

Here, the risk rating shows the severity of the identified risk, and the likeliness of occurrence shows the probability of that risk occurring in your IT infrastructure. This can be an excellent guideline to honestly assess and rank your risks to see where to focus efforts first and what can be avoided or delayed. Categorizing risks into different levels can help better understand the overall task and optimize resource utilization and project completion time. However, it only provides a theoretical perspective, and practical aspects sometimes favour lower-priority tasks.

What is the Process of IT Risk Assessment?

• Prioritise risks using Risk Matrix Systems or other alternatives
• Assess the severity of each risk based on factors like financial impact, operational disruption and data sensitivity
• Assign numerical values to risks for quantifying their impact and likelihood, if possible
• Determine your risk tolerance levels for IT-related risks. This would help later in the IT risk mitigation decision-making process
• Create real risk scenarios to model high-priority tasks’ potential consequences and impacts
• Estimate the probability of each risk occurring by leveraging previous records and data or/predictive algorithms
• Combine the values of likeliness and severity to get overall ratings for each high-priority task
• Visually represent this risk priority chart using charting libraries or data visualization tools
• Categorize each risk by category – compliance, cybersecurity, compliance, strategic or operational
• Maintain proper documentation of the IT risk management process with all the calculations, assumptions and assessments
• Share the result of the security risk assessment process with all involved stakeholders to enable data-driven decisions
• Start preparing the IT risk mitigation plan for all the high-priority risks. Make sure to reassess and reevaluate the mitigation plan periodically
• Ensure all risk mitigation and assessment plans align with the needed regulatory and industry requirements

Step 3 – Setting up IT Risk Mitigation Plan

How to Mitigate Information System Risks?

• Improve your security controls like firewalls, data encryption standards, 2-factor authentication and other such practices. Make sure to hold back power enough to reduce the chances of IT risks arising
• Establish proper access controls and follow the principle of least privilege to ensure limited authorization and access
• Provide proper cybersecurity training and raise awareness regarding phishing, safe internet usage and other cyber threats
• Develop comprehensive IT risk management security policies and procedures and ensure they comply with your industry standards and compliances
• Regularly backup critical data and keep backups available offline for better recovery
• Separate high-risk systems from the other parts of your IT infrastructure to reduce the spread of compromise
• Leverage data loss prevention tools for detecting unauthorized access or attempts to access sensitive data

Step 4 – Risk Management Monitoring & Reporting

How do you create a proper IT Risk Assessment Report?

• Start by defining the report’s scope with your primary objectives, an overview of current risks, continuous updates of risk mitigation efforts and highlighting any emerging risks
• Next, identify the key stakeholders – board members, IT teams, external stakeholders and regulatory bodies
• Gather all risk data in a concise document that records risk assessments, security audits, incident reports and vulnerability assessments
• Group the risks into similar categories to provide a structure that makes the IT risk report easy to understand
• Explain each risk’s severity and context so the stakeholders understand the possible impact and importance of addressing or not addressing a particular risk
• Establish performance metrics and KPIs to assure quality insights that help improve the overall security of IT processes
• Visualize these heavy data sets into easy-to-understand tabular formats or charts and graphs
• Offer risk mitigation recommendations as a TL; DR section for those stakeholders who can’t spend enough time reviewing the entire report
• Properly document the report with title, date and version number. Include details of the person who created the report for accountability and accessibility
• Validate the report before submitting it to the stakeholders
• Schedule a follow-up to address any questions, queries, concerns or plans of action for phases 2, 3 and so on
• Keep the loop going and aim for continuous improvement

Wrapping Up!

This is a quick guide on IT risk management explaining the importance of setting up a proper risk management strategy and discussing the step-by-step implementation process. If you need help handling your IT risk management solutions, you can leverage our IT strategy and consultation services to secure your IT infrastructure and improve its performance.