A Comprehensive Guide to Technology Risk Management

Importance of Technology Risk Management

Cyberattacks are increasing at an alarming rate, with billions affected worldwide. According to numerous studies, this directly results in operational disruptions and financial liabilities. The damage it inflicts can reach $10.5 trillion by 2025. Robust risk management measures targeting this challenge should be implemented to safeguard the organization’s operations and protect its bottom line.

Developing a technology risk management framework is vital to companies across industries, from small start-ups to global enterprises. Addressing IT risks proactively doesn’t just save companies money. It also enhances their security posture, guaranteeing regulatory compliance. It also makes them more attractive to partners, potential investors, and most importantly, the general public.

Types of Technology Risks

While digitalization improves many aspects of an organization’s Critical Business Functions (CBFs), tech also exposes businesses to numerous threats. Understanding these risks helps companies anticipate the potential consequences, especially undesirable ones.

Here are technology risks that IT managers and security teams should never overlook:

Types of Technology Risks

Cloud Complexity

Modern businesses rely on cloud computing for its scalability and cost-efficiency. However, many companies encounter misconfigurations and data loss. Microsoft Azure caused widespread disruptions for those using their cloud services due to a Distributed Denial-of-Service (DDoS) attack. This resulted in lost productivity and damaged Microsoft’s reputation.

Data Governance in Big Data

Managing, storing, and securing data is extremely challenging when there’s too much to handle. The public backlash against Cambridge Analytica’s unlawful data harvesting from Facebook led to millions of dollars in fines for the latter and permanent closure for the former.

Breach Containment Failures

Organizations struggle with identifying and containing security incidents in real time. Late data breach response can expose sensitive information, resulting in long-term reputational damage, lengthy lawsuits, and expensive compensation claims.

Vendor Reliance Risks

Dependence on third-party suppliers and service providers can expose businesses to risks outside their control. In 2020, software provider SolarWinds was targeted by hackers, negatively affecting their clients including government agencies worldwide. This unprecedented attack handicapped supply chains and made it hard for many to recover from the breach.

Remote Work Risks

Many shifted to remote and hybrid work to ensure operational continuity despite the pandemic shutdown. During this time, companies saw a rise in phishing attacks, exploiting workers’ less secure networks at home.

Business Continuity Challenges

Natural disasters, power outages, and system failures can disrupt business continuity, which is more problematic in today’s always-on world. Data centers went offline after the grid failed during the Texas winter storm, crippling many companies like e-commerce platforms that customers greatly rely on.

Emerging Threats

Threat actors continually develop sophisticated methods to infiltrate systems, steal critical user data, and angle for financial gain. According to a study, 7 out of 10 cyberattacks were ransomware. Unfortunately, this costly and damaging offense is increasing in number and may get worse in years to come.

Process of Managing Technology Risks

Organizations face increasing challenges because of the rapidly evolving digital landscape. Following a structured framework for managing tech-related risks equips businesses with a proactive approach to protecting their assets, operations, and reputation.

Here’s a detailed guide on technology risk management best practices:

Step 1: Identify risks.

Proactively address potential threats before they materialize by recognizing and understanding the risks in the company’s tech systems, applications, and processes. These are some tasks to perform:

• Update the inventory of all tech assets.
• Inspect IT systems, networks, and applications using digital checklists.
• Talk to IT and security frontliners to get their opinions about threats.

Step 2: Assess and prioritize.

Evaluate the likelihood and potential impact of the identified risks for better prioritization and resource allocation. Leverage risk assessment matrices and data analytics to qualify and quantify risks more judiciously.

Step 3: Develop risk mitigation strategies.

Reduce vulnerabilities by creating action plans to eliminate or minimize risks. Aside from formulating possible solutions and detailing the resources required for them, make sure to incorporate the following:

• Targeted training – Provide regular and specialized cybersecurity training for employees to help them recognize suspicious activities and follow security protocols.
• Incident response plan – Develop a step-by-step guide for reporting and addressing incidents. Specify the personnel responsible for certain tasks so everyone knows who to communicate and collaborate with.
• IT modernization – Update software solutions, patch vulnerabilities, and replace legacy systems. Start with the most critical upgrade if the budget doesn’t allow comprehensive digital transformations.

Step 4: Implement security controls.

The next phase is to deploy measures to protect systems, deter threats, and respond to them effectively. A zero-trust approach should be taken, shifting to continuous verification instead of assuming that users, devices, or network connections are trustworthy. These are some practices to implement:

• Install antivirus software.
• Enable firewalls.
• Monitor with intrusion detection systems.
• Utilize Multi-Factor Authentication (MFA) and Role-Based Permissions (RBP).
• Encrypt sensitive data.

Step 5: Monitor progress, review efforts, and update policies.

The benefits of technology risk management will not be fully achieved without ongoing control evaluation. Aside from ensuring the risk management program remains effective, this practice allows companies to adapt to evolving risks, which is inevitable.

Technology Risk Management Frameworks

Effective technology risk management isn’t optional. This critical necessity requires structured approaches to handle risks. Here are the most proven frameworks to align with:

• NIST (National Institute of Standards and Technology) Cybersecurity Framework provides the Identify – Protect – Detect – Respond – Recover guideline to ensure alignment with industry standards.
• ISO/IEC 27001 is an internationally recognized standard that established the Information Security Management System (ISMS) to protect sensitive data and ensure business continuity.
• COBIT (Control Objectives for Information and Related Technologies), created by the Information Systems Audit and Control Association (ISACA), provides tools for managing IT risks while ensuring ROI from IT investments. This focuses on governance, control objectives, and performance tracking.
• COSO ERM (Committee of Sponsoring Organizations – Enterprise Risk Management) provides principles for managing enterprise-wide tech risks, enabling organizations to integrate risk management into strategic planning.
• ITIL (Information Technology Infrastructure Library) sets best practices for IT service management so companies can effectively deliver quality IT services without disruptions.