IT risk management: identifying, assessing and managing risks

What is IT risk management?

It is a systematic approach to identifying, assessing and managing risks in the IT landscape. It involves taking steps to recognise potential threats to IT security and availability, and to minimise them to an acceptable level.

Such risks include threats from cyber-attacks, human error and technical faults. IT risk management focuses particularly on identifying such vulnerabilities as early as possible and initiating targeted protective measures. Therefore, it is not just about the technical protection of IT systems; rather, it is a strategic approach anchored in the company through appropriate processes, guidelines and security specifications.

In summary, IT risk management aims to prevent threats and vulnerabilities in a company's information resources from being exploited through comprehensive technical and organisational measures, ensuring uninterrupted business operations and protecting the company from financial or legal consequences. It is important that all these measures are well thought out with regard to company processes, and constantly checked to ensure they are up to date.

When is IT risk management important?

It is fundamentally relevant for all industries that rely heavily on IT processes or handle large volumes of data. This particularly applies to companies falling under the new NIS2 directive or the Digital Operational Resilience Act (DORA).

Currently being implemented in Germany in the form of a new version of the BSI Act (BSIG), the NIS2 directive tightens cybersecurity requirements for critical infrastructures and obliges certain companies to take comprehensive measures to protect their IT systems. The affected companies must therefore take appropriate and proportionate technical, operational, and organisational measures to manage the risks to the security of the networks and information systems used to provide services, and to prevent or minimise the impact of security incidents.

This also includes concepts relating to risk analysis and security in information technology (see Section 30(2) of the BSIG-E), as well as IT risk management measures.

While NIS2 primarily applies to operators of critical infrastructures, DORA is specifically aimed at the financial sector. DORA sets out detailed requirements for information and communication technology (ICT) management. Companies must have a digital resilience strategy in place and review it regularly. This includes an internal governance and control framework for managing ICT risks.

In many cases, this results in a de facto obligation for IT risk management. Implementing such a concept serves to fulfil legal requirements and exclude potential liability risks. However, effective IT risk management is also beneficial for companies not directly affected by NIS2 or DORA. Documenting appropriate measures provides a solid foundation for addressing liability issues, demonstrating the minimisation of internal risks, and avoiding lengthy and costly legal proceedings. Ultimately, this also strengthens customer and partner trust.

How does effective IT risk management work?

It can be implemented in clearly structured steps. The first step is to identify the risks. A comprehensive analysis recognises potential threats and weaknesses in the IT infrastructure. These risks are then categorised according to their probability of occurrence and potential impact. Prioritisation then takes place on this basis, determining which risks should be dealt with first.

The next phase involves managing the risks. Specific measures are developed to reduce or eliminate the identified risks. This includes technical measures, such as firewalls and regular updates, as well as organisational measures, such as training and emergency plans.

Finally, effective IT risk management requires the regular review and evaluation of these measures. The implementation of adopted measures can be practically monitored by means of audits, spot checks and threat simulations, for example.

International standards such as ISO 27001 provide a framework for IT risk management. Therefore, establishing an information security management system (ISMS) in accordance with ISO 27001 can help you proceed in a structured and comprehensible manner.

At the same time, ISO 27001 requires continuous improvement in security management, taking a holistic approach that incorporates evaluation into the implementation process. The German Federal Office for Information Security's (BSI) standards for IT baseline protection can also be used as a basis for IT risk management.

What are the biggest IT risks?

IT risks are potential losses or damage to a company's IT resources resulting from a vulnerability being exploited by a threat. The concept of IT risk is therefore extremely broad and complex, often depending on a company's technical equipment. The BSI classifies IT risks into three categories, whereby a risk can fulfil the characteristics of several categories.

Internal and external risks:

These can be inherent in the company's activities or arise from external influences. An example of an internal risk is human error; a lack of training or carelessness, for instance, can lead to security requirements being disregarded or potential dangers being overlooked. Examples of external risks include cyber-attacks, such as phishing or ransomware.

Direct and indirect risks:

This category is divided into two types: immediate risks, which are easily recognisable, and indirect risks, which result from more complex causal relationships between hazards and failures. Indirect risks, for example those resulting from unstable manufacturing processes, often have a less obvious impact on business operations.

Risks that can and cannot be influenced by the institution:

Certain risks, such as the choice of a service provider, can be managed by the company itself. General conditions that cannot be influenced, such as special legal requirements, can lead to a risk that cannot be influenced.

The IT-Grundschutz hazard catalogue also divides IT risks into specific classes:

• Force majeure, such as storms and technical disasters.
• Organisational deficiencies, such as inadequate controls and a lack of rules.
• Human error, such as misconduct and incorrect operation of systems.
• Technical failures, such as power failures.
• Deliberate acts, such as theft or targeted attacks.

How does ISiCO support IT risk management?

ISiCO offers comprehensive consulting and support services in IT risk management. We take a customised approach to ensure that your company remains secure and future-proof.

• We work with you to understand your company's specific circumstances and identify the requirements that apply to your industry.
• Our experienced, interdisciplinary team will then develop a customised strategy for identifying and managing potential risks. We take regulatory requirements (such as NIS2 and DORA) and applicable standards (such as ISO 27001) into account when doing so, thereby creating a solid foundation for your IT risk management.
• We support you throughout the entire process, from the initial risk analysis to the implementation of protective measures and the regular review and optimisation of security precautions. ISiCO will accompany you throughout the entire IT risk management process. This enables us to support you in recognising and minimising risks at all times.
• Our training courses and audits help anchor the jointly developed concept in your company's long-term strategy.