What is IT Risk Management?

• IT Risk Management Definition

  IT Risk Management Definition

  IT risk denotes the probability of an unexpected, adverse business outcome when a specific threat or malicious actor exploits an information system vulnerability. It could range from human error and equipment failure to cyberattacks and natural disasters.

  IT risk management is the application of risk management methods to manage IT threats. IT risk management involves procedures, policies, and tools to identify and assess potential threats and vulnerabilities in IT infrastructure.
• Why is IT risk management important?

  Why is IT risk management important?

  Before we discuss what risk management is and why it’s important, let's understand the IT risk equation first:

  Threat x Vulnerability x Asset = Risk

  The equation is a logical construct highlighting the relationship between different components constituting IT risk. It can also help in effective risk assessment. For example, assume your organization has weak security perimeters and poorly configured network devices. In this situation, the vulnerability lies in your network devices or assets an attacker could exploit, a potential threat, to launch a cyberattack. Since the network is highly vulnerable and the assets are critical, the risk would be high. In contrast, if you have correctly configured devices with strong perimeter defenses, the risk would be medium.

  For robust IT risk assessment in your business, consider these four core constructs:

  Threat: This is any event, action, or incident with the potential to compromise system security. It can be intentional and accidental, including malware, equipment failure, human error, and natural disasters.

  Vulnerability: This denotes the shortcomings or gaps in the information assets attackers can exploit to steal sensitive information. Identifying information system weak points and their exploitation methods is critical to mitigating overall IT risk.

  Asset: This is a broad term referring to an organization's software, hardware, stored data, IT security policies, privileged users, and even file folders containing sensitive data.

  Cost: This is the overall harm an organization incurs due to a security incident. It can be monetary, reputational, or both. When determining the IT risk, consider the overall adverse impact if the data is compromised or stolen.

  With clarity on components of IT risk, let's discuss the importance of information security and risk management.

  In today's evolving threat landscape, securing the IT infrastructure is paramount for risk managers in any organization. As organizations continue to explore and invest in new technologies, detecting and managing the risk associated with newly deployed applications or systems is crucial. Articulating a well-defined risk management strategy and putting it in action can help organizations mitigate IT disasters. It also serves as a blueprint for IT teams to establish the right technical controls, such as firewalls and multi-factor authentication, to improve their organizations' security postures. Likewise, the involvement of senior executives is vital to channel the IT security risk management efforts in the right direction.

  Managing IT risks is also important because a vulnerability can decrease trust and damage an organization's reputation. For example, customer-facing applications' unresponsiveness for an hour due to scheduled maintenance or a cyberattack can lead to poor customer experiences and bad publicity. With early detection of risks, you can minimize unexpected network downtimes to improve overall customer satisfaction. IT risk prevention also helps you prove compliance with various data security mandates and industry regulations, such as GDPR.
• What is risk assessment in IT security?

  What is risk assessment in IT security?

  Risk assessment facilitates the identification, classification, prioritization, and mitigation of various information technology threats. It can help organizations examine whether their existing security controls are adequate to tackle the consequences of potential threats or vulnerabilities in their IT infrastructure. Formulating a robust, transparent risk assessment methodology is critical before initiating risk evaluation. You can customize it based on your business's legal, regulatory, and contractual requirements.

  Outlined below are key activities of IT risk assessment:

  Identify valuable assets: First, compile a list of all the business-critical assets you’ll investigate for potential vulnerabilities. Examining all hardware, software, and information flows in an organization isn’t practically feasible. Therefore, you should prioritize and classify assets based on predefined standards like legal stature and business importance. Furthermore, you should incorporate these classification standards in your information risk management policy to save valuable time during the assessment.

  Assess threats and vulnerabilities: Determine the threats and vulnerabilities capable of compromising your information assets' availability, integrity, and confidentiality. Common IT-related hazards include malicious internal actors and natural disasters. Simultaneously, investigate vulnerabilities like old equipment, incorrect configurations, and unpatched systems in your organization, as attackers can infiltrate a network by exploiting these vulnerabilities.

  Evaluate and prioritize risks: At this stage, compare, prioritize, and rank risks by determining their possibility of occurrence and their subsequent impact on your information systems. Classify risks as high, medium, or low based on the scores assigned to them. Additionally, employ automated cybersecurity risk assessment and management tools for accurate risk analysis and identification of security events requiring immediate attention.

  Mitigate or prevent risks: After prioritizing risks, you can address them using as the following methods:

  • Risk avoidance is the most straightforward approach and requires organizations to evade activities potentially posing legal, financial, reputational, and operational risks. For example, you can avoid the risk of regulatory penalties by adhering to all the data security regulations in your region.
  • Risk modification allows organizations to lessen the adverse impact of unavoidable risks by establishing robust physical, technical, and operational controls. Physical controls like biometric security scanners can help organizations protect their tangible assets. Similarly, technical controls involve utilizing antivirus software, firewalls, and access management tools to prevent security incidents. Lastly, operational controls comprise robust security policies and procedures for smooth business functioning.
  • Risk transfer enables organizations to mitigate the consequences of risk by transferring or sharing it with a third party. Cloud vendors, for example, reduce the risk of business interruption for their clients by providing off-site data backups.
  • Risk acceptance says eradicating or transferring every risk is practically impossible, so an organization must accept specific threats as part of its overall security risk management process. For example, organizational networks have inherent risks—such as unexpected outages—but businesses still rely on them for communication or information exchange.

  Document, audit, and review: Lastly, prepare a detailed risk assessment report for auditing and compliance purposes. These reports should outline all the possible threats and associated risks, vulnerabilities, and possibilities of occurrence. Risk control measures and their implementation procedures should also be a part of the report. These control measures should be suggested based on the risk level. Continuously review and update these reports to improve the effectiveness of your IT risk management framework.
• IT risk management best practices

  IT risk management best practices

  Formulate a robust risk management strategy: Effective risk management begins with discovering and assessing all potential vulnerabilities in an IT environment, such as weak system passwords, unpatched systems, and malicious software downloads. However, manual identification and assessment can be costly and resource-intensive. Instead, organizations should leverage automated tools—such as help desk or service desk software—offering risk management capabilities. Such tools automatically identify and assess risks and alert security teams about potential issues.

  Perform IT asset management: Continuously monitoring IT assets such as routers and servers can help you minimize technology risks. You can employ reliable asset life cycle management software to run and maintain an automated, centralized network inventory providing detailed insights into your assets' performance, security, and licensing issues. For example, you can continuously monitor and track software license expiration dates and receive automated alerts with IT asset management solutions.

  Strengthen cybersecurity: Building and maintaining a secure IT infrastructure is critical to preventing cybersecurity risks. You must employ the right security tools, policies, and procedures to impede various threats. Aside from firewalls and antivirus software, utilize next-gen security tools such as security information and event management (SIEM) software to enhance your security controls. Automated tools like SIEM software maintain a detailed log of security events and correlate data to identify threats quickly. Furthermore, they allow you to set automated responses against security incidents, such as blocking IP addresses associated with unauthorized activities. Likewise, you can leverage built-in templates to generate security and compliance reports.

  Ensure transparent and clear communication: Formulating robust internal and external communication strategies is crucial to conveying risk details to concerned parties. Clear communication facilitates a faster, coordinated response against threats evident in your IT environment. It can also assist in speedier risk mitigation, assessment, and monitoring. Take input from all key stakeholders while forming your risk communication and management strategy to understand all the aspects of a given risk, including parties affected, major challenges, and potential recovery costs.

  Implement access control: Establishing strict authentication and authorization procedures can minimize the data security risks in your organization. Modern access management software can help ensure only authorized users have access to the most sensitive parts of your network, reducing the risk of insider threats. Furthermore, such tools continuously monitor the changes in your file system to track unauthorized alterations. They also help generate compliance reports outlining user permissions and activities. With tools like these, you can proactively track privileged users' accounts for unusual activities to stay better prepared against advanced threats.