What is Technology Risk Assessment?
Information Technology (IT) has gained wide importance amongst the competitive position of firms and hence managers have grown more sensitive to their organization’s overall IT risk management. With the aim to avoid such losses, managers are employing various qualitative and quantitative risk analysis methodologies. The risk analysis literature, however, suggests that these managers typically utilize a single methodology, not a combination of methodologies.
The purpose of this article is to review our knowledge about technological risk perception and assessment in particular emerging technologies and to suggest possible strategies to use this knowledge for improving our risk management practice. Technological risk assessment is generally defined as the “processing of physical signals and/or information about a potentially harmful impact of using technology and the formation of a judgment about seriousness, likelihood, and acceptability of the respective technology.”
An IT risk assessment starts with risk intelligence and threat analysis and thus 3 lists are needed:
The IT assets in your organization and how much damage their loss or exposure would cause
The business processes that depend on those assets
The threat events that could impact those assets and how likely those events are
Using the information from this risk assessment process, companies can determine which threats are the most important to mitigate. While laying out the enterprise’s risk mitigation plan, consider how it fits into the existing security program and the various practices it already includes for reducing risks.
Technology has changed the way businesses are done. It has helped to globalize the economy and impacted unalterably on everyday life at home. Financial institutions have started relying on technology on a massive scale to help support their business processes and handle plenty of important data. Given the importance of technology and the impact that it has on corporates, it is important that organizations place technology risk assessment practice at the highest priority of the corporate agenda.
With increasing cyber criminal activities and data privacy frauds, be it a retailer or some government agency, companies these days are more reliant on IT based systems, and for financial institutions, the risk of cyberattack and system disruption is comparatively high. These cyber frauds negatively impact shareholder value, disrupt the brand and expose companies to complex and embarrassing litigation. Henceforth, it is supremely important to undertake risk assessments exercise on a regular basis because:
1. Understanding Risk Profile
Identifying threats and ranking risks systematically is crucial and thus prioritizing risk management tasks and allocating resources appropriately is the foremost requirement. A risk profile describes potential risks in detail, such as:
The source of the threat
The reason for the risk (uncontrolled access permissions, trade secrets, etc.)
The likelihood that the threat will materialize
Impact analyses for each threat
2. Identifying loopholes
A gap-focused assessment methodology can help identify and distract vulnerabilities. In these risk assessments, cybersecurity, operations and management teams collaborate to evaluate security from the perspective of a potential attacker. The process may also involve an ethical hacker, who will ensure the company’s security controls and protocols are thoroughly tested.
3. Mitigating Costs
Regular IT risk assessment can help the company eliminate unnecessary security spending. Estimating risk accurately enables to balance costs against benefits: Company can identify the most unacceptable risks and channel resources toward them, rather than toward less likely or less damaging risks.
4. Understanding Legal Requirements
Most organizations have to comply with the privacy and data security requirements of various regulations. For example, healthcare organizations have to comply with HIPAA, which requires documenting their administrative and technical safeguards for patient data and conducting regular risk assessments to ensure that those safeguards are effective.
Regular risk assessment is also important for companies that need to comply with consumer privacy standards like PCI DSS or financial disclosure regulations like SOX. Non-compliance with regulations like these can be extremely costly for an organization.
Assessing and Managing Risks
Apart from the benefits and pros of technology risks, there are some loopholes and leakages in the technology risk system which might pose a problem to the company or the enterprise. There are different types of risks that a company might need to separate like sometimes the system just gets unavailable and face outrages, the company might get hacked from outside, the company’s sensitive data falls in some external hands, the company might fail to comply with some regulations and laws. Regardless of which risk takes place, the impact of those is always very critical. A company might lose revenues, lose reputation, lose efficiency, etc, so whatever type of risk the company faces, it can lead to a lot of damage.
It is important to create awareness about technology risks and make it obvious as to what can happen and what would be the impact if something happens. The next step would be to find an appropriate risk management process that covers usually steps like :
Process for risk identification for analyzing risks
Process for accessing the impact of identified risks
Process for taking actions
Monitoring the process that takes care that the risk management process gets consequently followed and that is also efficient.
Risk management exercise requires a lot of knowledge and awareness of both sides of the cards. People need to have a clear understanding of the business along with a clear understanding of underlying technology and the failures related to it.
The purpose of the technology risk assessment is to mitigate risks preventing security incidents and compliance failures. However, no organization has the resources to identify and eliminate all risks, so technology pros need to use the appropriate risk assessment techniques to provide focus. The more clearly a business can articulate its plan to reduce the most critical vulnerabilities given top threat sources, the better the business case. Today’s legacy environments are being taxed to accommodate new business realities. While new technologies offer tremendous potential to mitigate much of that risk, organizations must use them thoughtfully and deliberately prioritizing all the laws and regulations. If deployed as part of a well-considered program, this can result in improved efficiency, greater market opportunities and better returns on investment.
Copperpod provides Technology Due Diligence, Freedom To Operate (FTO) analysis, Trade Secret Protection analysis, and helps to maximize future licensing opportunities. Copperpod analyzes existing hardware and software systems and processes owned by the seller to provide you a clear and detailed view of the seller's architecture, growth plans and the investment that such growth will require.
Tanisha is a Technical Content Writer at Copperpod IP. Driven by excellence, she takes pride in providing the best blog content possible. She has a Master's degree and a Bachelor’s degree in Economics specialising in Policy Making and Industrial Economics. Tanisha has worked before as a Content Strategist at an Event Management Company and a Non-Profit Organisation. She takes a keen interest in Sensor Networks, IoT, Wearables, Life sciences and Virtual Reality.