Top IT Risk Management Strategies and How to Apply Them

Let’s face it, life is full of uncertainty. Every aspect of our existence carries a certain amount of risk, be it in our professional or personal lives. We just need to do what we can to identify and plan for those situations where things can go wrong without putting ourselves in a fearful paralysis state, unwilling to take any chances.

As it is with individuals, so it is with businesses and organizations. There are many uncertainties in the business world—especially in information technology (IT)—and the stakes are high. That’s why smart people have an active IT risk management plan as part of their overall business strategy.

This article explores the concept of IT risk management, including what it is, the overall IT risk management process, the steps in an IT risk management plan, and best practices.

Let’s begin with the fundamentals - defining IT risk management.

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What is IT Risk Management?

To best answer this question, we must first ask, “What is regular risk management?”. Risk management, without the IT qualifier, identifies, assesses, and controls any threats to an organization’s resources, capital, and earnings. So far, so good.

IT risk management is like basic risk management, except the principles are applied to an IT organization to better manage the risks associated with that particular field. Alternately, we can define it as the policies, procedures, and technology that an organization adopts to reduce threats, vulnerabilities, and consequences that may arise from unprotected data.

IT risks include software and hardware failures, spam, viruses, and other malicious attacks, human error, and natural disasters (e.g., floods, fires, storms).

There is a classic risk equation that aptly applies to IT risk management:

Threat x Vulnerability x Consequence

• Threat 

  The IT world has threats surrounding it from all sides. Even vendors can inadvertently bring in threats to their customers

• Vulnerability
  

  Every IT defense has gaps and weaknesses. Once an organization recognizes its flaws, it can begin to address them

• Consequences 

  Cyberattacks can wreak havoc on an organization, and possibly even ruin it permanently

IT Risk Management Steps

Every IT risk management framework consists of a series of necessary steps, each summed up with a question.

1. Risk Identification (What are the Risks, if Any?) 

   Though it’s impossible to account for every possible variable, the IT manager and team should brainstorm over what risks may arise, where they come from, and when they will most likely hit. The IT team must go one step further and speculate on how those risks could impact the project and any related outcomes.

2. Risk Analysis (How Bad are the Risks?)
   

   Once the management team identifies all the risks, the team must analyze them and judge their potential impact (big, small, minimal) and how it would manifest itself.

3. Risk Evaluation and Assessment (Are the Risks Acceptable?) 

   After the team has determined the likelihood of the risk occurring and what its consequences would be, the team takes an even closer look at the risks and helps the company decide whether to proceed. The team also ranks the risks at this point, going from highest to lowest. A solid risk assessment is an excellent tool for making informed choices.

4. Risk Mitigation (What Are We Going to do About these Risks?)
   

   The company then assesses the highest-rank risks and develops strategies for alleviating them with risk controls. These strategies include risk prevention tactics, contingency plans, and risk mitigation processes.

5. Risk Monitoring (How’s the Risk Management Going, and Have We Found any New Risks?) 

   This step involves follow-up of the identified risks and how they’re handled, as well as the continuous monitoring for new risks.

6. Report the Findings (Who’s in the Loop, and do They Know?) 

   The risk management team must keep in contact with internal and external shareholders through every step of the process.

Risk management should also have answers to the following questions. Note that some of them overlap with the process above, as the entire process is fluid and subject to changes and duplication.

• What can possibly go wrong?
• How will this affect the company?
• What measures can we take to protect the organization from loss?
• How do we recover if loss happens anyway?
• How will the company absorb the expenses associated with the loss?

What Are IT Risk Management Strategies?

There are currently four standard risk management strategies to choose from. The best choice depends on the nature of the specific risk and the organization’s overall situation. After all, each organization has its set of advantages and faults, so there can’t be a one-size-fits-all solution.

• Risk Avoidance 

  The organization deflects as many risks as is practical and possible, focusing significant resources to that end. Unfortunately, most rewards require some risk, so an organization practicing avoidance may miss many opportunities for growth and profit

• Risk Reduction 

  Risk reduction is a mitigation strategy, where the organization changes certain aspects of a project plan, altering the process, or possibly reducing the scope.

• Risk Sharing 

  The organization spreads the risk’s impact among other departments or project members. Companies could even share the risk with an outside business partner or vendor.

• Risk Retention 

  Finally, we come to the “grit your teeth, march full speed ahead, and hope for the best” approach. This strategy involves accepting the risk as a necessary evil and proceeding with the plan. The reward is deemed worthy of the risk, and if anything blows up, so be it.

IT Risk Management Best Practices

A good IT risk management policy includes a series of best practices. Put these practices into action, and you get a greater likelihood of success with minimal negative impact.

• Evaluate Early, Evaluate Often
  

  Risk management isn’t an afterthought. Instead, managers must initiate risk management processes at the development stages of the project, and then continue to monitor the risks through the project’s lifecycle. Constant vigilance!

• Lead From the Front 

  A good leader sets good examples, and that includes getting on board with risk culture development before the subordinates do so. A leader who adopts risk management values everyone’s input, demonstrates the importance of acknowledging the presence of risk, and keeps a positive attitude when responding to risks.

• Clear Communications 

  Proper risk management depends on keeping clear, open channels of communication throughout the organization. Good communication facilitates rapid identification and response to any risk.

• Robust Policies 

  Organizations need a healthy risk assessment plan in place before the project gets underway. This practice includes contingency and continuity plans and making sure everyone on the team knows their role.

• Bring in the Stakeholders 

  Involve the stakeholders throughout the process since they bring a unique perspective to risk assessment. Sometimes the outsider looking in can see things the insiders can’t.

• Get Sign Offs 

  Every stage of your risk management strategy must be signed off by the appropriate people, including the stakeholders.

IT Risk Assessment and Management Resources

Risk management is but one element of service life cycles. You can find out more about how they interact by checking out this tutorial, ITIL MALC-  Key Concepts of the Service Lifecycle Tutorial. The tutorial covers the topic of risk management and its place in the service lifecycle. The IT industry recognizes ITIL as a best practice framework for IT service management, so it’s worth looking into.

CRISC stands for Certified in Risk and Information Systems Control. The ISACA calls it “the most current and rigorous assessment available to evaluate the risk management proficiency of IT professionals and other employees within an enterprise or financial institute.” If you’re serious about learning about risk management, Simplilearn offers this article on CRISC certification training. It explores different aspects of CRISC, including what it is, its importance, and how to get certified.

Do You Want ITIL Certification?

If you want to understand ITIL frameworks better and enhance your IT Service Management quality, then you should get ITIL certified. Simplilearn offers an ITIL 4 Foundation certification training course that gives you a firm understanding of the ITIL 4 framework, including the core concepts and terminologies of ITIL’s service lifecycle. By the time you earn your ITIL certification, you will understand how ITIL grew and changed to adopt modern technologies, new operational processes, and the necessary concepts in a service management framework.

Offered as a corporate training, self-paced learning, or Blended Learning course, you will gain the benefit of 19 Professional Development Units (PDUs) for self-paced learning and 22 PDUs for online classes. Your workload will consist of 30 chapter-end quizzes, a pair of industry case studies, and two simulation exams. Finally, you get a certification exam voucher to take the test and earn that certificate!

Understanding risk management strategies unlocks many career opportunities in the IT field, offering job security and excellent benefits. For example, IT consultants earn an annual average of USD 78,829, according to  Payscale, topping out at USD 122,000.

The course also benefits IT security managers, CIOs, team leaders, and IT architects. Check out Simplilearn today and enhance your IT career (or begin a new one!).