Investors are shifting their focus away from traditional assets, such as cash and bonds, and into the new technology sector. This is a trend that we expect to continue — but it comes with significant risk. The risks from fraud, hacking and cybersecurity breaches can cost a company millions of dollars in damages.
In this blog post, we’re going to look at three reasons why technology in risk management is important:
1. Technology has Become a New High-Growth Asset Class
Several industries and government agencies have extended regulatory compliance regulations that analyse companies’ risk management strategies, policies, and procedures since the early 2000s. In a world of stagnant growth, technology has become one of the fastest-growing asset classes.
2. Cybersecurity Threats are on The Rise and are Potentially Very Costly
It’s not just investors who are excited about technology; so too are criminals who see opportunities in disrupting this area. There are a number of high-profile breaches every year, from Home Depot to Yahoo and from Target to many European banks.
3. Technology can Help Mitigate Investment Risk
Technology can help mitigate technology risk. Here we’re going to look at three ways that technology can be used to limit harm when it comes under attack, and even protect key information assets against internal threats as well as external ones.
What is Technology Risk Management
Technology Risk Management is a sub-set of Information Technology (IT) risk management that focuses on addressing cyber threats and also concerns with the use of technology and information assets.
A successful Technology Risk Management program helps an organization ensure the safety of its critical information assets by using robust data protection strategies. It also enables an organization to recover in case of a security incident.
The objective of IT risk management is to provide protection against the risks inherent in handling information technology assets. These risks can include improper disposal of information, unauthorized access to sensitive data, loss or theft of confidential data, and downtime due to network failures. To help address these challenges, effectively managing security risks associated with your IT infrastructure is essential.
Technology risk is a unique and complex subset of information technology risk that involves using the Internet, the cloud, digital data and mobile devices to develop, maintain and protect information assets. Though technology is a vital part of most organizations’ everyday operations, it can pose substantial risk to ensure its integrity.
What is the Difference Between IT Risk Management and Cybersecurity
Companies began to adapt and adopt the technology as the internet and email matured in the 1990s. Information technology risk management (IT risk management) addresses all risks that can affect the IT infrastructure of an enterprise. Cybersecurity, on the other hand, is a subset of IT Risk Management and focuses on addressing the cyber threats as well as concerns. It may be a part or a complement to an IT Risk Management program and would include such activities like data backup & recovery, encryption, physical security etc.
The overall objective of an IT Risk Management program is to provide protection of the information assets that are vital for the success of any organization by managing the inherent risks involved in handling them.
IT risks can include improper disposal of information and sensitive data, unauthorized access to information, or loss of information due to theft, or misuse.
Enterprise Risk Management (ERM)
Enterprise risk management (ERM) is a systematic process for identifying, assessing, and mitigating risks across an organization. ERM is an architecture for risk management that comprises five main elements: Continuity of operations, prevention and detection, response, mitigation, and recovery.
It helps organizations proactively manage risks and make informed decisions about how to best protect their interests. ERM involves all levels of an organization and includes both internal and external stakeholders. IT risk assessment is a key part of ERM and can help organizations identify and mitigate risks.
Examples of Key IT Risk Management Concerns Include:
• Backup & Recovery
Backup and recovery are a part of the everyday operations of any organization. It takes place in different stages like the backup to tape, backup to tape with encryption, physical backup (booting up a system) and recovery.
Concerns related to storage, storage media and backups include off-site storage media security; timeliness; mechanical integrity, fire & water damage etc.
• Disaster Recovery
All organizations need to be prepared for disasters that might occur from natural causes like fire, flood and earthquake; or from man-made causes like terrorist attacks. Companies need to plan for and develop a disaster recovery plan which offers suggestions on how to restore business continuity after a disaster strikes.
Disaster recovery plans are prepared in advance with measures like off-site data storage, off-site data back up, off-site access capabilities etc.
• Information System Security
The security of the information system is extremely important to protect against improper access of information by unauthorized personnel or loss of information due to theft or misplacement, viruses and other destructive elements like human error etc. when the information system is being used.
• Information System Backup and Recovery
Backup and recovery of the information system is a key concern for any organization especially if there is a multi-site scenario. Backups need to be managed, and tested periodically (including all aspects like data, software, hardware etc.) as well as have off-site storage capability at a different secure location in order to ensure continuity of business.
The Benefits of Technology in Risk Management
1. The Benefits of Artificial Intelligence for Cybersecurity
Artificial intelligence (AI) is one of the most important technologies for cyber security. AI platforms, such as Darktrace, can monitor a company’s systems 24/7, looking for anomalies. It uses this knowledge to detect threats in minutes and shut them down before they even reach the corporate firewall.
2. The Benefits of Blockchain Technology to Reduce Cybersecurity Risk
Blockchain is laser-focused on maintaining the integrity of information assets and its immutability by using cryptographic hashes to ensure that data can’t be tampered with or changed — and it requires no third-party intermediary to help enforce this level of trust among users in the network.
Blockchain technology would appear to offer a verifiable digital record of transactions — which is especially attractive to financial institutions and others looking to do business online.
3. The Benefits of Big Data to Help Fight Cybersecurity Threats
Big data is a powerful tool that helps companies predict when and where a cyber attack will occur. It can be used for real-time threat prevention, as well as for continuous monitoring of the systems, looking for anomalies that might indicate a possible breach. Big data in cybersecurity provides a tremendous return on investment, according to Gartner’s Magic
The Risks that Come with Technological Advances Include:
• Business Transformation
The advent of new technologies has transformed many industries over the past few decades. Businesses now must be better prepared for these changes than in the past because they are becoming more frequent and faster than ever before. In order to remain competitive in this environment, businesses must embrace change for organizational growth even when it might be difficult or uncomfortable.
This has led to many industries transitioning from paper-based to digitized processes. As organizations are forced to keep pace with rapid technological advancement, this poses a risk of organizational disruption. Image processing was introduced as a method for risk assessment in medical problems in 1997.
• Cloud Computing
Cloud computing is a major paradigm shift in technology that has been widely adopted by both private and public organizations across the globe. This shift in the way companies delivers IT services is one of the fastest and biggest changes ever seen within the IT field.
The move away from legacy mainframes and legacy systems/infrastructure, combined with the mobility of information has created unique risks to address as organizations continue to shop cloud services.
• Disruption in the Technology Sector
Technology has been at the forefront of disruption in all industries including healthcare, government and law enforcement, retail and financial services amongst others. This disruption is attributable to technology enhancing customer engagement through competitive pricing or entirely new business models.
The disruption caused by new technologies has been a direct result of data breaches, providing vulnerabilities for cybercriminals who have used these avenues to gain access to sensitive data and accomplish other malicious goals.
• Cloud Security
Cloud computing is a revolutionary type of technology that allows companies to rent resources from third parties without having to invest in their own technology infrastructure. This has resulted in a large and growing number of businesses using cloud computing services.
• Mobile Technology
The proliferation of mobile devices has created many avenues for malicious actors to gain access to sensitive information they can use for nefarious purposes.
Ransomware is malware that can encrypt data on users’ computers, then hold that data ransom unless the victim—typically the user—pays a fee or supplies person-specific information. The extortionate criminals behind those attacks are becoming more sophisticated and elusive, making it difficult for federal investigators to keep up with them.
The Challenges of Technology in Risk Management
Risk management is the process of identifying, assessing and managing risks. It is a proactive process that helps organizations to manage risk and protect against potential losses.
A risk management program should include a risk assessment, which is a systematic process for identifying and analyzing risks. Risk analysis is a tool that can be used for risk assessments.
There are growing challenges in maintaining appropriate safeguards to address the emerging vulnerabilities that technology brings.
The most common issues arise due to:
• The Complexity of Cyber Security
Like other business sectors, many IT professionals are challenged by the complexity of cyber security and its related responsibilities. This is because IT professionals must have the knowledge, technical skills, and current knowledge of regulations to effectively manage cyber security risks.
• The Evolving Threat Landscape
Current federal laws do not keep pace with the rapidly evolving nature of cyber-offences or associated technologies. It’s important for government agencies to develop mechanisms for identifying threats and enforcing appropriate penalties for successful attacks.
Governance, risk management and compliance (GRC) is the umbrella term covering an organization’s approach across these three areas: Governance, risk management, and compliance.
• The Growth of Cloud Computing
Individuals and businesses are using cloud computing services for a variety of needs. This may include storing large amounts of sensitive personal information, business strategy data, or any other type of information. Data is often stored on remote servers, and the organization will have limited control over its security.
• The Impact of Technology on Future Generations
The increased use of technology by today’s young people will likely require changes in the education system to ensure youngsters can meet the expanding workforce requirements. That could profoundly change schools as we know them now and require providers to adopt a more organized approach to address technology-related learning needs.
This has continued into the current decade, where smartphones and tablet computers are widespread, and Big Data plays a critical role in many businesses’ day-to-day operations.
The Future of Technology in Risk Management
Technological advancements are not likely to slow down. In fact, they are likely to continue to grow and evolve at an even faster rate as technology outpaces the security controls that protect information.
A data breach is a security incident in which information is accessed without authorization. A data breach can occur when a malicious actor gains access to a system or when a system is left unsecured.
Managing risk is a key part of any organization’s security strategy. Understanding the information risk management process involves identifying, assessing, and managing risks. Risk management strategies can vary depending on the type of risk and the organization’s tolerance for risk. Information risk management is the process of identifying, assessing, and managing risks.
The nature of computer network attacks is different than in the past and cybercriminals are now able to use sophisticated tricks and techniques that allow them access across a wide spectrum of devices. Cybercriminals are also tech-savvy, which makes them better equipped in terms of taking advantage of their knowledge of IT systems.