Risk Management in IT

13/06/2020 0 By indiafreenotes

IT Risk Management is the application of risk management methods to information technology in order to manage IT risk, i.e.: The business risk associated with the use, ownership, operation, involvement, influence and adoption of IT within an enterprise or organization

IT risk management can be considered a component of a wider enterprise risk management system.

The establishment, maintenance and continuous update of an Information Security Management System (ISMS) provide a strong indication that a company is using a systematic approach for the identification, assessment and management of information security risks.

Different methodologies have been proposed to manage IT risks, each of them divided into processes and steps.

According to the Risk IT framework, this encompasses not only the negative impact of operations and service delivery which can bring destruction or reduction of the value of the organization, but also the benefit enabling risk associated to missing opportunities to use technology to enable or enhance business or the IT project management for aspects like overspending or late delivery with adverse business impact.

Because risk is strictly tied to uncertainty, decision theory should be applied to manage risk as a science, i.e. rationally making choices under uncertainty.

Steps to IT Risk Management

IT risk management is the application of risk management methods to information technology to manage the risks inherent in that space. To do that means assessing the business risks associated with the use, ownership, operation and adoption of IT in an organization. Follow these steps to manage risk with confidence.

  1. Identify the Risk

You can’t prepare for risk without first figuring out, to the best of your ability, where and when it might arise. Therefore, both manager and team must be alert to uncovering and recognizing any risks, then detailing them by explaining how they might impact the project and outcomes. One method is using an IT risk assessment template.

  1. Analyze the Risk

Once you’ve identified risk, you then must analyze it and discern if it’s big, small or minimal in its impact. Also, what would be the impact for each of the risks. Study the risk and how it might influence the project in various ways. You’ll add these findings to your risk assessment.

  1. Evaluate and Rank the Risk

Once you evaluate the impact of risks and prioritize them, you can begin to develop strategies to control them. This is done by understanding what the risk can do to the project, which is determining the likelihood of it occurring and the magnitude of its impact. Then you can say that the risk must be addressed or can be ignored without faulting the overall project. Again, these rankings would be added to your risk assessment.

  1. Respond to the Risk

After all this, if the risk becomes an actual issue, then you’re no longer in the theoretical realm. It’s time for action. This is what’s called risk response planning in which you take your high-priority risks and decide how to treat them or modify them, so they place as lower priority. Risk mitigation strategies apply here, as well as preventive and contingency plans. Add these approaches to your risk assessment.

  1. Monitor & Review the Risk

Once you act, you must track and review the progress on mitigating the risk. Use your risk assessment to track and monitor how your team is dealing with the risk to make sure that nothing is left out or forgotten.

IT Risk Management Strategies

Strategies are a way to provide a structured approach to identify, access and manage risks. They provide a process to regularly update and review the assessment based on changes.

  1. Apply Safeguards

This is an avoidance strategy, where the company decides to avoid risk at all costs and focuses a great deal of resources to that end. If you can avoid the risk, then it is no longer a threat to the project. However, there is a downside to this. If you avoid the risk, you also avoid the associated potential of its return and opportunity. So, it’s a decision not to take lightly.

  1. Transfer the Risk

This is a transference strategy, when the company transfers the risk to another entity. This redistribution can be onto the company members, some outsource entity or an insurance policy.

  1. Reduce the Impact

This is a mitigation strategy, where the company works to reduce the impact of the risk through methodology, teams or whatever resources are at its disposal. It can involve small changes, but always must come by process and a plan.

  1. Accept the Risk

This is an acceptance strategy, where you know there is risk and accept that, so when and if it occurs you can deal with it then and there. This is sometimes unavoidable, but manageable if you have followed the steps in your project risk assessment template.

Best Practices for IT Risk Management

Here are six best practices when managing risk in IT.

  • Evaluate Early & Often: There’s no better time to start on the risk management process than now, so begin early. Remember it is a process and so it will continue throughout the project. Then continue monitoring all the time. Risk never sleeps.
  • Lead from the Top: Good leadership is many things. One aspect is developing a risk culture at the organization. That means valuing input from everyone, believing in the importance of acknowledging risk and keeping a positive attitude about responding.
  • Communications: Having a clear channel to communicate risk throughout the organization is paramount to identifying and responding quickly and effectively to risk.
  • Strong Policies: If there is not already a process and plan to deal with risk, you’re always going to be one step behind. This is again why a project risk assessment is key, but so is understanding roles and responsibilities for everyone on the project team, having a continuity plan, etc.
  • Involve Stakeholders: A great resource that is often overlooked are the project stakeholders, who have a unique perspective and can provide insight into areas where risk might arise. So, involve them throughout the process, from asking for their participation with the risk assessment template and over the whole course of the project.
  • Get Signoffs: At every stage of your risk management, get people to sign-off on the strategy, which includes the stakeholders.