IT Risk in Context

Towards a more integrated approach

Published/updated: December 2006

by Dale Vile

As organisations become ever more dependent on information technology, managing the risks associated with IT systems is seen as increasingly important. But is it possible to consider IT related risk in isolation from more general business risk management?


Organisations are waking up to the broader risk landscape
Over 60% of the 715 senior IT managers participating in a recent study conducted across Europe and the Middle East say risk is considered broadly across their organisation as part of the business planning process. A significant minority are still behind the curve, however, with a third only considering risk in specific areas, and 4% not planning explicitly around risk at all.

Unravelling IT risk from business risk is becoming almost impossible
When asked about the degree to which specific risks are considered, loss of business critical information and operational downtime as a result of key systems failure come top of the list, closely followed by illicit use of confidential information. IT systems resilience, recoverability and security are therefore an integral part of the business risk equation. Furthermore, the prominence of risks in areas such as legal and regulatory compliance highlight the need for traceability and other information management imperatives that can only be dealt with through effective IT.

Managing risk is an important pre-requisite for innovation
While it is normal to consider risk management from a defensive point of view, 80% of organisations say risk related concerns have held them back from taking full advantage of modern technologies and working practices, e.g. in areas such as home working, supply chain automation and advanced communications. This underlines the role of effective risk management as an enabler of business advantage and highlights the opportunity-cost associated with limited or uncertain resilience.

A more coordinated executive led approach is being adopted by forward thinkers
Many organisations have appointed a Chief Risk Officer (CRO) to oversee risk management activity, particularly in financial services where 48% have a CRO in place compared to the overall average of 36%. Organisations are also striving for more coordination at a practical level, e.g. between physical and IT security, and across security and information management.

But there is still a way to go before genuinely cohesive risk management is achieved
While many organisations say their spending on IT risk related investments is escalating, the funding of risk management activity is still fragmented and inconsistent. There is also an under representation of input from both business analysts and IT professionals into the definition of risk requirements at a business level. Given the dependencies on IT systems we have seen, organisations that are serious about taking a genuinely cohesive approach to managing business risk must make IT a much more integral part of the overall process than it currently is.

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