Technology risk (or IT risk) is the chance that technology failures, such as cyberattacks, service outages, or outdated equipment, could disrupt business operations. If not managed properly, these risks can lead to financial losses, reputational damage, regulatory penalties, or strategic setbacks.
This article explores common types of technology risks, the importance of technology risk management, strategies to mitigate risks, and how tools like ZenGRC can help businesses build a stronger security posture
How Risk Management Tackles Technology Risks
Risk management includes the strategies, processes, systems, and people that a company uses to manage potential risks. A key part of this is technology risk management, which identifies risks before they occur and creates a plan to address them.
Risk management looks at the internal and external technology risks that could affect business continuity. Companies can keep risks at an acceptable level by identifying risks, analyzing their impact, and implementing safeguards.
Common Technology Risks
Technology can create hidden weaknesses or vulnerabilities that quietly undermine even the strongest systems.
- Cyberattacks
- Phishing: Fake emails trick employees into sharing sensitive information by clicking on harmful links or responding to a fake coworker request.
- Malware: Malicious software, often from phishing attacks, that damages devices or IT systems. Common types include:
- Trojan Horse: Disguised as a safe program, it steals sensitive data, spies on users, or grants hackers access.
- Ransomware: Locks data or systems until a ransom is paid.
- Data breaches: Sensitive information can be stolen or leaked from external attacks (e.g., hacks, malware, or phishing scams) or internal issues (e.g., disgruntled or improperly trained employees).
- Outdated equipment: Software providers often include patches for emerging cybersecurity threats in updates. It’s crucial for security to keep software up to date.
Benefits of Technology Risk Management
Managing technology risk reduces vulnerabilities and has other benefits too, such as:
- Lower financial losses from data breaches: A single data breach can cost millions in fines, lawsuits, and lost customer trust. Remember the Equifax breach of 2017 that exposed the personal data of 147 million people and resulted in a $425 million settlement? Technology risk management helps identify weak spots so they can be fixed before they’re exploited.
- Better agility: A successful technology risk management strategy helps your business respond quickly to threats, which reduces disruptions to business processes.
- Stronger business continuity: An active risk management plan ensures business operations continue even during disruptions. This minimizes downtime and gives customers and stakeholders confidence in your services.
Top 5 Technology Risk Frameworks
The following frameworks provide established methodologies for managing technology risks effectively.
- Control Objectives for Information and Related Technologies (COBIT): Bridges the gap between IT governance and business requirements. COBIT aligns IT management with business needs and provides measurable controls.
- NIST Cybersecurity Framework: Organizes cybersecurity risk into five core functions: Identify, Protect, Detect, Respond, and Recover. This framework was developed by the National Institute of Standards and Technology, which publishes standards, guidelines, and best practices.
- ISO 27001: An international standard for information security management systems (ISMS). It specifies requirements for establishing, implementing, and continually improving an organization’s approach to managing information security risks.
- Cybersecurity Maturity Model Certification (CMMC): A unified standard for implementing cybersecurity across the defense industrial base. It has five maturity levels that reflect the reliability and effectiveness of a company’s cybersecurity practices.
- Factor Analysis of Information Risk (FAIR): A quantitative model for information security and operational risk assessment that helps organizations understand, analyze, and measure information risk in financial terms.
What Is Risk Management in Information Technology?
Risk management in information technology focuses on protecting data and IT systems from risks like human error, cyberattacks, system failures, or natural disasters. Businesses that address vulnerabilities early are better prepared to prevent damage from a cybersecurity incident.
A solid IT security and risk management program allows companies to navigate decision-making processes for strategic information security risk control while staying focused on business goals.
What Are the Steps in Information Technology Risk Management?
Here are the steps to assure a comprehensive information technology risk management strategy.
Step 1: Identify Data Vulnerabilities
Find where critical data is stored. Remember to include cloud service providers, shared drives, web portals, email, and messaging services. Know that there’s an increased risk of data theft in cloud environments, so it’s vital to account for diverse data touchpoints.
Step 2: Analyze Data Types
Calculate the risk of each data asset by multiplying the likelihood and financial impact of a data breach.
Step 3: Evaluate and Prioritize Risks
Rank risks based on their likelihood and potential harm, then prioritize responses. Low-risk data in high-risk locations may be damaged.
Step 4: Set Risk Tolerance and Establish Processes
Decide whether to accept, transfer, mitigate, or refuse identified risks. Implement controls like insurance, firewalls, and encryption to mitigate risk, while understanding their limitations. You should also establish robust IT risk management processes.
Step 5: Mitigate Existing Risks
Deploy firewalls, encryption, data backups, hardware updates, and multi-factor authentication to mitigate risks that exceed defined business risk tolerance, reduce vulnerabilities, and enhance security controls.
Step 6: Use a Data Security Solution
Invest in reliable data security solutions to enhance protection against critical risks and alleviate the burden on internal teams and. Be sure to entrust data access to security professionals to minimize potential threats.
Step 7: Continuously Monitor Risk
It’s important to remain vigilant because cyber threats constantly evolve with advancements in new technologies and artificial intelligence. Review controls regularly and adapt to emerging threats like ransomware, cryptocurrency, and phishing.
What Are Four Approaches to IT Risk Management?
There are four main ways to handle technology risks.
- Risk avoidance: Eliminating in risky situations, like outdated software that could lead to system failures or cybersecurity risks during the lifecycle of a project.
- Risk reduction: Implementing measures to keep risk at an acceptable level and minimize potential impact.
- Risk transfer: Shifting or sharing risk. For example, transferring the financial burden of reputational damage or system failures to a third party, like a cybersecurity insurance provider.
- Risk retention: Accepting minor operational risk, while focusing initiatives on higher-priority threats.
Reduce Technological Risks with ZenGRC
ZenGRC 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.
Integrating ZenGRC with your risk management framework enhances incident response capabilities, minimizes operational risks, and protects against reputational damage.
Schedule a demo to learn more about ZenGRC and how it can help.