Information technology (IT) risk management identifies and evaluates any man-made or weather-related events that can negatively impact business operations, degrading IT capabilities and associated data.
Businesses formulate a system of policies, procedures, and technologies specifically designed to reduce or eliminate threats or vulnerabilities by utilizing a five-step risk management process.
What Is the 5-Step Risk Management Process?
The five-step risk management process consists of these actions:
- Identifying the risk
- Analyzing the risk
- Prioritizing the risk
- Treating the risk
- Monitoring the risk
The risk management process is cyclical; routine risk assessment of all identified vulnerabilities or threats should be conducted on a regular basis to assess changes in risk posture.
Suppose during the risk assessment, a change has occurred with any vulnerability or threat. In that case, applicable adjustments will be made to the priority, treatment, and monitoring routines to minimize any impact to IT services or data.
What Happens in the 5-Step Risk Management Process?
Each of the five steps is important, and a risk assessment is not fully completed if a threat is not correctly identified. Any perceived threat, no matter how small, needs to be considered. If the threat is deemed to be minor, it can be resolved in one of the other four steps.
The risk management process starts by identifying all perceived threats.
Identifying the Risk
Identifying the risk is the most crucial step to complete an effective risk management process. Organizational participation is essential to capture any potential cyber threats — and all input needs to be accepted.
Consider external threats, internal threats, nefarious employees, and unintentional acts as possible cyber threats. After all facets of risk types are identified, you can build a project risk register.
The register will be used as you step through the risk management process to identify the risk level and risk modification plan, with the overall intent of lowering the residual risk level.
Analyzing the Risk
Analyzing the risk involves evaluating the possible problems a risk will cause for a business and determining how likely that risk is to occur. If a risk occurs, what is the potential damage to the business? Each risk identified needs to consider these business factors thoroughly:
- Potential financial loss
- Potential frequency and severity of risk
- Potential productivity loss for the business and service loss for customers
Prioritizing the Risk
Prioritizing the risk combines the likelihood of the risk occurring with the potential damage the risk will cause if it occurs. The more likely the risk is to happen, and the more potential damage it might cause, the more business resources should be directed to reduce the risk.
Treating the Risk
Treating the risk means taking the highest ranked risk and applying specific risk remediation actions to lower the risk to an acceptable level. For each risk — going from the highest risk to the lowest — take appropriate risk remediation actions to reduce the risk to an acceptable level.
Monitoring the Risk
Monitoring the risk requires upfront communication with all business staff and stakeholders. At this point, you are applying risk assessment concepts to track and monitor how the business is managing the identified risk. If there is any change in status, a new risk management process cycle should begin.
Read more on eSecurity Planet: Best Risk Management Software for 2021
5 Methods to Manage Risk
There are different ways to manage risk, and they vary from assuming the risk to transferring the risk. Briefly, here are five strategies for managing risk:
- Risk Avoidance: Risk is avoided by not performing a specific IT operation
- Risk Retention: Accepting the potential risk with an ongoing IT operation
- Risk Limitation: Implementing best practices to minimize a potential risk
- Risk Planning: Managing the risk by developing a risk mitigation plan
- Risk Transference: Transferring the liability of the risk to an insurance provider
What Is the Goal of the Risk Management Process?
When using the risk management process, all potential cyber security threats and vulnerabilities need to be considered. In addition, all physical access procedures, hardware and software technology used, and processes for installing new technology or services (including maintenance actions) need to be part of the risk management review.
A comprehensive approach to risk management that considers all business facets will ensure a solid cyber defense posture for your business.