What is Technology Risk?
Technology risk, or information technology risk, is the potential for any technology failure to disrupt a business.
Companies face many types of technology risks, such as information security incidents, cyberattacks, password theft, service outages, and more.
Every type of technology risk has the potential to cause financial, reputational, regulatory, and/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 aimed at effectively managing potential technology risks.
Essentially, the goal of cybersecurity risk management is to identify potential technology risks before they occur and have a plan to address those technology risks. Risk management looks at the internal and external technology risks that could have a negative effect on a company.
Risk management teams define their technology risk management plans by identifying and analyzing technology risks, managing the technology risks by implementing their strategies, and forming contingency plans.
Technology risk management process
The first step in the technology risk management process is 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 process. Consequently, it makes sense to have a group of people who can effectively identify the many sources of technology risks. The members of this risk management team combine their knowledge and experience to scan the full range of possible technology risks.
After the risk management team identifies the technology risks, the team members develop a risk management plan to address each and every technology risk they’ve identified. Risk management teams then use some type of technology risk assessment tool to categorize and prioritize the technology risks.
The process of prioritizing technology risks helps risk management teams categorize the technology risks according to the level of impact and the probability that certain technology risks will occur.
In addition, crafting a technology risk register, a record of information about 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 best manage the technology risks, they have to identify the causes of the technology risks that they’ve 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 proactively 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.