Technology risk has been a big drawback for businesses all around the world. Hence, technology risk management is nothing but crucial for a business, not only to grow and become profitable but also to survive among competitors. So, what is technology risk? Tech risk refers to the possible threats or disruptions that occur in business operations.
There are different types of such risks including cybersecurity breaches, system downtime, outdated infrastructure, and scalability problems. Though recognizing these risks is easy, tackling them may seem challenging. Further, not dealing with the risks on time may lead to losing the trust of the customers, legal penalties, and discontinued partnerships.
To know how technology risk management and business strategy work hand in hand and become requisites in an organization, be sure to read till the end of this article.
What is technology risk in a business context?
Technology risk, in a simple sense, is the risk caused because of incompetent technologies within an organization. Bad hardware, outdated software, unstable networks, and unreliable data are some of the main causes of tech risks in a business.
In the business world, across industries such as SaaS, e-commerce, or fintech, these risks are more commonly seen. Therefore, it is necessary to proactively manage risks with applicable and relevant measures on time to avoid any financial or reputational threats both in the short and long term.
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How technology risk influences business strategy
Technology risks create a negative impact on business strategy making. An example of this is a server downtime or an integration failure leading to loss of finances and market share. In industries like healthcare, finance, and education, bad systems can lead to fines or trigger regulatory inspections.
Per the report from IBM’s Cost of a Data Breach Report 2023, unchecked technology risk led to a data breach cost worth $4.45 million. While it is extremely important to keep upgrading the technology in your business, staying competitive requires development, MVP releases, and rapid experimentation. In case you fail to meet these requirements, the possibility of tech risks increases.
Hence, businesses have started using technology risk, not as a hurdle, but as a means for strategic planning. Using the right strategy for innovation is the way to go for tech partners and investors who want to avoid technology risk, making them beyond just technological threats.
Practices That Reduce Technology Risk
When we discuss technology risk management, we are not talking about cutting out every possibility of such risks. So it may not even be realistic. However, managing them properly is both realistic and enabling for growth and innovation within a business.
The following are some practices that reduce technology risk:
Continuous Security Audits and Architecture Reviews
Finding vulnerabilities through continuous security audits will save you from the heavy costs of security breaches and system failures. Likewise, reviewing system architecture also helps build platforms that are based on the latest, resilient foundations.
Future Code’s IT Infrastructure Risk Assessment will help clients effectively apply system reliability.
Modular and Expandable Technologies
Using modular or cloud-native solutions provides smooth scaling and quick upgrades. These technologies do not only offer upgrades or reduce bottleneck-related issues but also enable easy problem resolution through isolation without fully disrupting the system.
Google Cloud’s architecture guide gives you a clear set of principles to use for growth, resilience, and scaling in your business.
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...Technical Debt Management
Technical debts are unavoidable in just about any business, especially a growing one. You have to strategically refactor the delay and give much priority to speed. A decision-making framework with a clear debt register helps a business lean towards innovation without inviting risks unknowingly.
Going through When to Tackle Technical Debt can help you prioritize technical debts in a growing business.
Backup, Redundancy, and Disaster Recovery
Frequent failover systems, data replication, and backups show that there are methods to restore systems and decrease impact when errors occur. This is necessary to encourage customer confidence in a business.
The CISA’s Resilience Guide shows the necessary frameworks for resilience and business continuity.
Well-Managed Risk as an Accelerator of Innovation
Tech startups that build and rely on CI/CD pipelines with scheduled releases, reversion possibilities, and automated evaluation are a perfect example of businesses owning well-managed risk as an accelerator of innovation.
With an initial effort, businesses can skip the fear of failure and experience faster deployment. Teams can further take smarter risks in tech management and innovation this way. DevOps Enablement Services is all about building effective deliveries with systematic protection.
Conclusion – Risk Management as a Foundation, Not a Blocker
Technology risk management helps provide a stable base for businesses to make bold moves. Your organization will be saved from avoidable issues every time they arise. Investing in risk management is investing in flexibility. And, you automatically become more credible in the eyes of investors, partners, and customers.
Needless to say, risk management is absolutely a requisite in the competitive business world, regardless of the nature of the industry you’re working in.
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