Technology risk, also known as information technology risk, is a type of business risk defined as the potential for any technology failure to disrupt a business. Companies face many types of technology risks, such as information security incidents, cyber attacks, password theft, service outages, and more.
Without an appropriate incident response, every type of technology risk has the potential to cause financial, reputational, regulatory, or strategic risk. As such, it’s critical to have an effective technology risk management strategy in place to anticipate potential problems.
Risk Management’s Role in Technology Risk
Risk management includes the strategies, processes, systems, and people that manage potential technology risks. It is a part of enterprise risk management.
Essentially, technology risk management aims to identify potential technology risks before they occur, and then implement a plan to address those technology risks. Risk management looks at the internal and external technology risks that could hurt a company.
Risk management teams (usually composed of IT specialists) devleop their technology risk management plans by identifying and analyzing technology risks, managing the technology risks by implementing their strategies, and forming contingency plans.
Common Types of Technology Risk
Thanks to modern dependence on technology, businesses have several different technological vulnerabilities. These will vary for each industry and the types of technology used, but some of the most common types of technology risk include:
The most common form of phishing occurs when individuals receive a fraudulent email with a link. If they click the link (and sometimes even if they simply open the email), they can open a cyberspace path for cybercriminals to steal data or install malware.
Malware is software installed by an outside entity that causes harm to either the device or the individual accessing the software. There are two common types of malware: viruses and ransomware.
One common form of virus is the Trojan Horse. It’s malware that looks like a legitimate program, but once installed, a malicious code will execute the attacker’s plans: stealing data, spying on activity, or gaining backdoor access to closed systems.
Ransomware is a type of malware that locks a user’s computer until the attacker’s requests are met (typically paying a ransom or divulging confidential information).
Data breaches occur when sensitive information is stolen or leaked to unintended parties. Breaches can happen from external attacks such as hacks, malware, or phishing scams. Internal data breaches are also possible, usually due to disgruntled or improperly trained employees. Regular internal audits of IT environments can help to reduce the instances of data breaches.
Keeping software up-to-date is often as simple as allowing for regular or automatic downloads from the software provider. These updates include patches for new and developing cyber risks, helping to keep your sensitive information safe.
Some software updates, however, cease supporting old devices over time. This means that outdated equipment may not be as safe as a new technology. Auditing IT hardware is important for mitigating technology risks, as it allows your organization to assure continued software updates and security patches.
Benefits of Technology Risk Management
The most obvious benefit of technology risk management and risk mitigation is that your organization can reduce its vulnerabilities. Active risk management plans reduce the likelihood that an anticipated risk will occur. That said, technology risk management has other benefits too, such as:
- Reduced costs. Every risk has an associated cost, and technology risk is no different. By reducing the likelihood of risks, your organization saves on the costs associated with financial and reputational losses.
- Improved agility. Technology risks cause disruptions, which delay business processes and scatter daily operations. A successful technology risk management strategy helps your business to respond to risk events in a more agile way, allowing for shorter disruptions and improved business continuity.
Technology Risk Management Process
The first step in the technology risk management process is a technology risk analysis. At this stage, the teams use tools to identify technology risks and prioritize the technology risks so they can assess and resolve them.
Identifying technology risks should be an ongoing effort. Consequently, it makes sense to empanel a group of people who can identify the sources of technology risks. The members of this risk committee should combine their knowledge and experience to scan the full range of possible technology risks, identifying which risk management frameworks are appropriate for each.
After the risk management team identifies the technology risks, the team members should develop a risk management plan to address each risk identified. Risk management teams should then use a risk assessment software tool to categorize and prioritize those risks.
Technology risks should be prioritized based on the potential harm they would impose on the organization and the likelihood of the risk actually happening.
In addition, compiling a technology risk register – that is, a formal record of identified technology risks – can help organizations identify potential technology risks to stay on top of potential issues that can derail their intended business outcomes.
Mitigating Technology Risks
Before risk management teams can decide how to manage the technology risks, they have to identify the causes of the risks identified. At this point, the risk management team discusses how each technology risk will impact the business.
As risk management teams learn about the causes of the technology risks, the impacts of the technology risk that they’ve identified, and the probability that the risks will occur, teams can start to determine possible solutions to manage or prevent technology risks.
Risk management teams should also write the technology risk responses into their risk management plans to prepare for the next part of the process, which is implementation.
Working from the top priorities down, the risk management team will then break down the risk responses for each technology risk into action steps, which become part of the risk management plan.
The risk management team should immediately implement whatever action steps they can to prevent the technology risks from occurring. If a technology risk occurs, the risk management team can retrieve the plan and put the appropriate steps into action.
Reduce Technological Risks with ZenRisk
ZenRisk from Reciprocity helps you manage technology risks across your organization. Automate third-party vendor processes, schedule risk assessments, and share quarterly reports with key information security stakeholders. ZenRisk’s robust tools allow you to seamlessly move from risk management to assessment to analysis and implementation all in one place.
Schedule a demo today to learn more about ZenRisk.