The Fundamentals of Modern-Day IT Risk Management

As new technologies crop up, businesses are being plunged further and further into an ever-expanding labyrinth of associated risks and opportunities. What worked a couple years ago may not suffice in modern-day businesses. And with an ever-growing abyss of cybersecurity threats, business leaders have no other alternative but to invest in practical cyber risk management practices.

In this article, we explore what constitutes modern-day IT risk management and the various elements that can make the difference between success and endurance.

What’s the Essence of IT Risk Management?

Simply put, the primary purpose of IT risk management is to locate potential vulnerabilities, minimize or obliterate their potential negative impact. Rather than providing bland advice, risk managers deliver strategic, value-driven solutions that your business actually needs.

To help you break down the real essence of risk management, here are some mind boggling insights on the current state of business IT risks:

• Just a year ago, 3,122 data breaches affected nearly 350 million people. That number has since risen to 10,626 confirmed data breaches in 2024.
• The average cost of a data breach is $4.88 million. Organizations in the healthcare business witness an even higher average at $9.77 million.
• While ransomware, phishing, and social engineering attacks top the charts for IT related challenges, the infusion of new digital transformation technologies and vendors poses additional risks that businesses must combat.
• IT budgets can range from 3% – 19% of revenue depending on your industry. For instance, retail and commerce industries spend about 10% of their share revenue on IT. Regardless, reining in the costs can be overwhelming for small organizations on a tight budget.

In the end, IT risk management aims to tackle imminent and potential risks to your organization’s posture. In so doing, businesses are able to enhance operations while maintaining resilience and profitability in the face of adversity.

The Inefficiencies of Traditional Risk Management Methods

Traditional risk management practices are largely built around common business risks. These risks include financial, competitive, operational, and risks of a strategic nature. Here, different departments tend to “own” their risks. Often, they forget that such risks are interconnected and bear impact on the organization as a whole. 

Here’s an example. Operational downtime caused by a serious breach could have financial risks where litigation is involved to reimburse the affected parties. Similarly, unprepared employees risk leaking sensitive data to unauthorized parties. Failure of action against perceived threats could wreak havoc on the organization as a whole and not just the affected department.

In a world of dynamic business needs, a siloed approach to risk management is not enough to cover the full scope of challenges businesses face. Modern-day risk management has pivoted towards a broader focus on matters such as regulatory compliance and reputation management.

Conducting Comprehensive Risk Assessment for Smooth Operations

Risk assessment is an essential part of your risk management strategy. Unseen risks in business can put your business in the way of severe consequences. Think of a comprehensive risk assessment as a deep diagnosis, detecting problems before they turn into major disaster. With that in mind, here’s how to conduct a thorough risk assessment for your business:

Identify Risk and Take Inventory of Existing Systems and Data

For most organizations, risk is defined as a probable event with potentially devastating aftermath. Acknowledging these events creates the foundation for early preparation and resource allocation to counter these challenges.

Once risks have been defined, the next step is pinpointing which elements of your existing environment are likely to take the hardest impact. These are your mission-critical assets. Servers, backups, and enterprise SaaS applications and the data they hold fall in this category. Any hindrance with their operation, accessibility, and performance should be treated with urgency.

Pinpoint Vulnerabilities/Flaws Within Your Infrastructure

There’s a fine line between risk and vulnerability. While risk refers to potentially devastating events, vulnerability refers to weakness within your IT ecosystem. For example, if your employees are not adequately trained on sanitary data protection measures, they risk involuntarily aiding in severe data breaches, for example, by clicking on malware links.

Similarly, organizations that collect and store customer data have a responsibility to protect that data from unauthorized access. Without advanced data encryption and network protection measures, this data remains at risk of theft. Vulnerability scanning in the form of AI-powered monitoring can help reveal existing flaws and pave way for swift corrective action.

Calculate the Potential Impact the Threat Would Have

Each threat has a separate potential impact on different operations. A severe data breach carries with it an existential threat for SMBs. A whopping 60 percent of small companies go out of businesses within the first six months after a breach. The cost of repair, remediation, and legal fees often proves too much for small businesses to bear, leading to closure.

A thorough impact analysis should provide clearer insights on the damage potential that would befall your business, should these events occur. Events with the greatest potential impact on your business should be treated with urgent priority. Low-impact risks with marginal repercussions, on the other hand, can be treated with mild priority. 

With a detailed impact analysis, you can get a clearer picture about where to divert resources and when.

Seek Corrective Action and Document Your Risk Management Strategy

The final step in your risk management strategy is to deploy corrective action across your business. Employee awareness training, for instance, is a necessary step toward combating negligent actions that would risk exposing company data. Investing in more skilled personnel or involving third-party managed IT providers imports more advanced skill sets and technologies that may not be readily available in-house.

With these measures at hand, it’s time to document your risk management strategy. This should detail each potential risk separately and highlight the specific course of action. Some businesses will turn to artificial intelligence for proactive monitoring while others will prioritize data analytics as part of their risk management strategy.

From a logical perspective, comprehensive documentation helps communicate your organization’s needs to stakeholders and justify your recommended course of action. It’s important to remember that risk management is not a one-time process. As your business grows, it is likely that more threats will come your way.

Overcome IT Challenges with the Help of a Managed IT Service Provider

When all is said and done, it remains clear that IT risks will continue plaguing both large and small organizations. Tapping into the expertise and resources of a managed IT provider can help tame these issues and bring back control over your business tech infrastructure. 

At Boomtech, we position ourselves as a reliable and trusted IT partner. We empower businesses with the tools that they need to predict risk, weigh its impact, and deploy calculated measures to prevent adverse effects on operations. Schedule a free consultation with us and let us know how we can help!