How does Risk Management Relate to IT Governance?

Risk management is a policy that is part of several corporate processes. It allows businesses to have a more solid routine, in which the company avoids losses and problems in delivering results. With the digital transformation taking technology to several processes, risk management has also started to influence IT governance processes. 

This is because as IT becomes a means to provide higher quality services, it is essential that the company can integrate technological solutions into its day to day without compromising the viability of its operations. That way, it is possible to be more competitive and efficient without taking unnecessary risks. 

What is risk management? 

Risk management is a management policy aimed at mitigating the factors that can lead the business to have occurrences that lead to financial and commercial losses. In other words, it works to control, identify, prevent, and mitigate all points that may compromise the reliability of corporate routines, as well as causing failures and interruptions in the workflow. 

This process goes through all the company's activities. In investments, for example, it prevents the company from purchasing a low-cost tool. 

In processes with safety risk, it helps professionals to work with less chance of an accident occurring. In technology, risk management can prevent security vulnerabilities from being frequent and the company from decreasing availability in the IT infrastructure. In all cases, it makes the work environment more efficient and prepared to deal with risky scenarios. 

What is IT governance? 

The IT governance policy is a set of processes related to the way the company performs the management, control, monitoring and maintenance of the entire hardware and software infrastructure of the business. In this way, the technology can be integrated into several corporate routines without creating bottlenecks, quality problems or even failures in the integration between teams. 

In other words, IT governance ensures that the IT infrastructure has maximum availability and performance, on an ongoing basis. This guarantees managers the ability to deliver good results, using innovative solutions and aligned with the business objectives, that is, IT will become an integrated tool throughout the company's operational chain. 

How does risk management relate to IT governance? 

Risk management is one of the components of IT governance and a company that does not think of these two concepts in a unified way will always run the risk of creating new security holes and points that could compromise its performance and the quality of its services. 

This is because once IT becomes part of the company's daily routine, the risks associated with the misuse of technology become a reality that deserves the managers ' consideration. After all, if poorly managed, software, network devices and even smartphones can become the key to security threats and malicious people. 

Therefore, the business must always consider that good governance is done with the support of risk management. From the viability of new investments to the way in which each configuration contributes to creating new risks, it is essential that the company is prepared to deliver to its professionals a robust, reliable, high-performance technological apparatus with a low level of security breaches. 

See also: Risk assessment and prediction tool 

What are the steps to optimize risk management from the IT infrastructure? 

To optimize risk management and align it to IT governance, the company needs to adopt some practices. They allow the two policies to be integrated more easily, avoiding security problems and the quality of internal routines. See some key points below! 

Always consider the viability of investments 

Every IT investment can have risks. Therefore, when choosing to purchase a new tool, assess the feasibility of the expense and how it will affect the company's routines. 

For this, it is important to consider the internal demands, the profile of the company's operations and its medium- and long-term objectives. It is also essential to identify how the new solution will be integrated, the costs of its installation and maintenance in the medium and long term. That way, it will be easier to assess whether it is worth purchasing new software or hardware for the business. 

Assess security risks 

Always consider the security issues that can strike the business when adopting a new tool. Considering each risk factor, the company can easily define preventive, monitoring and breach mitigation measures and, thus, prevent the new solution from negatively impacting users' privacy. 

It is also important to think about digital security from the existing infrastructure. Risk management must always consider how IT governance can contribute to the business having a more or less secure environment, that is, the way in which the configuration of the infrastructure can lead to new failures in the medium and long term. This will assist in the optimization of the digital environment, with more effective and accurate control and monitoring processes. 

Integrate teams responsible for IT governance and risk management 

IT teams and teams responsible for risk management must always work hand in hand to ensure that the impact of their actions is the best possible. Therefore, it is essential that there is good integration between the teams, with leaders working together to achieve the same goals. 

Therefore, create an integrated operating structure. Communication and alignment of objectives and goals must be continuous. Thus, everyone will be able to work to have an infrastructure that is efficient and, at the same time, safe and of high performance. 

As companies digitize their daily routines, IT governance is taking a strategic role within the corporate environment. Having a quality operational flow, in which technology can actively contribute to improving corporate results, has become fundamental. 

But the use of tools like cloud computing and Big Data can expose the company to risks. When these technologies are poorly managed, the company is at risk of data leaks and, therefore, losing business. 

Therefore, it is essential that risk management is always thought alongside IT governance. This will ensure that the company can take more advantage of the benefits of digital transformation, such as increased innovation and mobility. In other words, the company will be able to achieve solid commercial results with more security and quality. 

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Comment by Douglas Webster on May 11, 2020 at 3:20pm

I regret to have to take strong exception to many points in this article. If I did not know otherwise, I would have guessed it was written 20 years ago when it states "With the digital transformation taking technology to several processes, risk management has also started to influence IT governance processes." Risk management has long been a part of IT governance.  One need look no further than discussions on cyber-security to see the impact of risk management on IT.

The article goes on to state that "Risk management is a management policy aimed at mitigating the factors that can lead the business to have occurrences that lead to financial and commercial losses." This too seems like a definition from 20 years ago.  ISO 31000, the international risk management standard, defines risk as "the effect of uncertainty on objectives.”  This includes both the upside (opportunity) and downside (threat) of risk. The COSO ERM standard also supports this broader definition of risk. Moreover, risk management is not limited to a focus exclusively on "financial and commercial losses."

While the article correctly states that the risk management process goes through all the company's activities, it is inaccurate to state that it "prevents the company from purchasing a low-cost tool." Spending more money on a tool certainly does not automatically reduce risk.  Moreover, even if risk were reduced, the ultimate goal is to deliver stakeholder value. There are many times when an intentional acceptance of greater risk is called for in order to achieve greater results at lower cost.  Risk is simply one element of delivering stakeholder value (along with results sought and resources allocated).

The article is certainly correct in stating that risk management should be a part of IT governance. However, this is nothing new. The National Institutes of Science and Technology (NIST) published 800-37, Guide for Applying the Risk Management Framework to Federal Information Systems: A Security Life Cycle Approach" in February 2010, laying out a framework for integrating risk management into IT.

This article also refers to security risks. For anyone interested in this important topic, I suggest reviewing NISTIR 8286, Integrating Cybersecurity and Enterprise Risk Management (ERM), which is available in draft form (and open for public comment) at https://csrc.nist.gov/publications/detail/nistir/8286/draft.  

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