As organizations navigate an uncertain and complex business environment, it has become essential to anticipate risks before they arise. Risks can shut down a business or cause long-lasting damage that is costly and time-consuming to recover. When a foreseen risk becomes a reality, a well-prepared business is ready to manage it effectively.
Establishing a risk management initiative is important for organizations of all sizes who want to ensure long-term business success. To initiate a risk management activity, identifying risks is a key first step in strategic business planning.
What is Risk Identification?
Technology research and consulting firm Gartner defines Risk Identification as “a set of activities that detect, describe, and catalog all potential risks to assets and processes that could negatively impact business outcomes in terms of performance, quality, damage, loss or reputation. It acts as input for actual risk analysis of the relevant risks to an organization.”
The definition sounds complicated. Let’s break it down to make it easier to deal with. Identifying risks means analyzing every aspect of business activities, from operations, IT systems, and personnel to investing and financing activities. After assessing all potential dangers that can affect a business, rank them according to the magnitude of the risk and the probability of them happening.
IT Risk Assessment
The digitization of businesses has increased the number of risks associated with IT. For instance, software isn’t housed securely in a locked room. Most applications today are SaaS-based or on the cloud, out of the organization’s span of control.
People access a company’s applications and data from any place at any time using their smartphones, tablets, or laptops. As businesses adopt mobility and cloud computing for efficiency and convenience, the threat of cybercrime and data privacy risks are increasing.
If IT risks go unchecked, a negative impact on a company’s finances, operations, morale, and reputation is imminent. The growing number of cyberattacks each year has left little choice for organizations to implement a robust IT risk management plan and process.
How a Risk Management Plan Helps
A risk management plan defines how risks associated with IT will be identified, analyzed, and managed. It documents identified risks and the appropriate response to each risk by creating a “plan of attack”: an outline of all the risk management activities that will be performed, managed, and monitored.
IT Risk Management Process
Risk mitigation in IT involves five fundamental steps. It is a dynamic process and needs to be revisited regularly to minimize the impact of potential information security or technology risks.
Step 1 – Identify Risks
A clear first step to IT risk management is to identify where the potential risks are present. Bring together all stakeholders that can help contribute and identify potential risks. IT risks can range from hardware and software failure, human error, and cyberattacks to natural disasters such as cyclones, fires, or floods.
Step 2 – Risk Analysis
Determine the occurrence of a risk and the potential impact on the organization. Conducting an analysis will help prioritize and strategize against different risks. For example, a security incident that may have compromised Personally Identifiable Information (PII) should be considered a high-priority item. When analyzing risks, consider the financial, operational, and reputational impact on the organization.
Step 3 – Treat Risks
IT teams have limited time and resources to manage risks. It is impossible to treat every risk equally. Using the Impact, Urgency, and Priority matrix should help map and rank the most important risks to focus on. The matrix can be as simple as:
| Risk | Impact | Urgency | Priority |
| Risk 1 | 1 – High | 1 – High | 1 – Critical |
| Risk 2 | 1 – High | 2 – Medium | 2 – High |
| Risk 3 | 1 – High | 3 – Low | 3 – Moderate |
| Risk N | 2 – Medium | 3 – Low | 4 – Low |
Impact – The effect of an incident or problem on business processes.
Urgency – It is a function of time and the speed at which a business expects to restore normal operations.
Priority – Priority is the intersection of impact and urgency. The higher the impact and urgency, the more severe/critical the risk.
Step 4 – Develop Response
After prioritization, it is time to respond to the risks. Creating a risk identification process helps teams establish risk mitigation techniques. These techniques can include setting up firewalls, data encryption, regularly patching endpoint operating systems, and putting up a Zero-trust security model for the organization. Anticipating risks and implementing proper controls will minimize the impact of threats.
Step 5 – Monitor and Review Risks
Unfortunately, in the real world, not all risks can be eliminated. Bad actors continuously develop new techniques, requiring IT teams to revisit the risk analysis and response steps constantly. Additionally, risk analysis must occur every time an application, integration, or vendor is introduced into the organization. For support, organizations can install device monitoring software that can automatically alert IT teams when issues are detected.
Wrapping Up
Regardless of risk management strategies, a fundamental IT risk management process is necessary to manage IT risks in an organization. Organizations looking to establish a process should start by defining the risk parameters, followed by a business impact analysis.
Post-analysis, documenting the risks helps communicate with the entire organization about the plan of action and support required from business stakeholders. Ultimately, the company should ensure everyone is mindful of risks and take steps to prevent them.
