Protect Your Financial Institution from Threats by Understanding Your IT Risk

Greg Smith

IT risk is an essential piece of the enterprise risk management puzzle that is often misunderstood due to its complicated nature. While most risks are easy to measure, there is no single easy, systematic way to quantify information technology (IT) risk. Truth be told, most organizations don’t have a complete understanding of their security risk. Why is this? Let’s take a look.

What makes IT Risk so challenging to understand?

  1. IT risk is difficult to measure. IT risk is notoriously difficult to quantify. In the financial services industry, ratios are the most typical standard used for judging performance. Measurements such as profitability, return on equity, and delinquency rates on loans are easy to understand and compare. However, it’s hard to calculate IT risk and put it into a logical system that CEOs, CFOs, and board executives can understand. Much of the readily available data is squishy, qualitative data that doesn’t speak well to the quantitative world of finance.
  2. IT risk is a hard sell. Every day in the news, someone gets hacked or breached. For most executives, the “breach of the day” phenomenon keeps cybersecurity top of mind. Unfortunately, many information technology and security professionals fail to explain the risks effectively. They are often hampered by not having the ability to measure a complete security program over time. Company leadership, particularly within financial institutions, need to be sure that their investments are going to have a pay-off. From their perspective, for example, when one hires a new sales person, one can expect additional sales. If a security company does not have a good process to calculate a meaningful ROI, or tell a good story about how the investment is going to protect them in some tangible way, it’s difficult to get leadership onboard.

While understanding IT risk is challenging, the importance of getting a true picture of your security program cannot be understated. Many financial institutions seek an IT partner, though they should exercise caution regarding whom they select. Most IT companies are product-focused, lacking the ability to provide leadership with a complete understanding of the security program. A technology product is not going to mitigate IT risk on its own; technology is simply part of the solution. To get a complete picture of your organization’s IT risk, you need to develop, possibly with a business-minded cybersecurity partner, a repeatable process that can be used to measure a program over time that shows improvements and points to areas that need further attention.

Download the white paper “Integrating IT Risk into Enterprise Risk Management for Financial Institutions” to learn an approach that not only supports better structure, reporting and analysis of IT risks, but also contributes to an overall culture that better positions executive leadership to more efficiently prioritize and address enterprise risk.

If you don’t get the funding to have an independent evaluation of your program that is accurate and complete, you won’t understand how protected you are. Without the right information, your exposure to risk might greatly exceed what you think it is, leaving you at a major disadvantage against hackers. What’s more, organizational decisions related to overall risk management are misinformed. It will be difficult to allocate adequate resources toward protecting your assets to achieve a proper security posture.

This is where Alagen’s cybersecurity services triumph. We offer a systematic approach to understanding an organization’s IT risk. By designing a repeatable process to measure security programs year after year, we can develop scorecards using recognizable metrics. We make the daunting task of understanding IT risk possible.

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