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The way that an organization handles risk is a big deal. Despite being born out of opportunity, opening a business itself can be looked on by many a major risk. As a result, every business should be looking to manage their risk. Today, we take a look at the role risk plays in business, and how IT, for all its benefits, carries with it some risk.
What is Risk?
As defined, risk is an event or circumstance that results in a negative outcome for the business.
Business risk may be a little difficult to measure. The exposure of risk presents the possibility that a company will see fewer profits compared to other scenarios; and conversely, how that company manages its risk could be what comes to define its existence.
To manage risk, a business owner, a manager, or an employee has to first acknowledge that it's there. Some people are better at this than others. Typically, organizations that blaze ahead without protecting themselves against risk can only get so far before that lack of diligence catches up to them.
What’s more, many organizations will look on their IT risk management as a project. This is largely wrong because there is no end to the risks that keep coming and coming from both inside and outside of an organization; and, it's your job to define exactly what these risks are.
Say you run a retail business. When you have a lot of one product and you are having problems getting rid of it, you put it on sale, right? The risk of having too much of one item is a simple one to manage. Not everything is that simple. That’s why many businesses put together a committee of department representatives who discuss organizational shortcomings to help identify risks. In IT, risk largely results in downtime and data loss. These two factors are clearly defined, and therefore, can be tested for. How does any organization work to reduce or eliminate downtime and data loss? What practices or procedures could the organization put in place to mitigate the risk of suffering from those effects?
Start by singling out every system you have discovered that presents your business with some semblance of risk. Now, take the time to consider how each could be taken advantage of. Define what practical solutions are available to keep the individual systems from exposing the organization to more risk, and then, once you’ve identified all your potential weaknesses, begin the process of planning a strategy.
By analyzing the most critical possibilities first, and then running tests on corresponding systems to see what the potential damage could be if the risks are not reduced, you will get a good idea of what kind of capital outlay it is going to take, in products, services, and manpower, to keep risks from sinking your endeavor.
What is most important in the risk analysis phase is to be able to set priorities. This is done in much of the same manner as you would set priority for about anything. You look at your assessment of risk, the potential cost of mitigating that risk, and the possible effect risks could have if they aren’t addressed. The ones that could cause the most problems for the most important systems get priority.
One you are finished inventorying your organization’s risk factors and assigning priority, you have to begin placing controls in these systems to mitigate the risk of systemic failure. In this case, controls are typically policies or tools that allow for the management of risk. Many times, if it is a problem for your organization, it is a problem for another business, and they may have some documentation or some advice on how they went about implementing a solution to the problem. Additionally, organizations like the National Institute of Standards and Technology (NIST) will have a suggested (and often tested) framework available to help you find, and deploy a solution to your problem.
Monitoring and Reporting
Once your controls are in place and functioning effectively, your organization will want to closely monitor them. Monitoring will allow you to get a good idea of how effective your controls are at patching your operational problems and mitigating risk. Fixes can be simple or convoluted and difficult, but ultimately by keeping a close eye on your changes, you’ll at the very least, be able to get a picture of what the true cost of any problem’s solution is costing your company.
Another benefit of monitoring is that it provides you the perspective you need to properly report your organization’s attempts at risk mitigation. These reports will allow organizational decision makers the critical information they need to make important determinations about risk management attempts and can be a crucial element if your organization manages data that fall under regulatory mandates.
By being steadfast in your risk mitigation efforts, thoroughly monitoring them, and building comprehensive reports you will make some major inroads in the way that your business handles risk. Reducing risk promotes a culture of success. If you are looking to learn more about risk mitigation, management, and practices used to create a more efficient and secure business, call the IT professionals at Preferred today at 708-781-7110.