Leveraging Service Partners to Mitigate and Manage Technology Risk

Managing risk is a key component of running any successful business, program, or department.

There is always risk — whether it be a key employee leaving, losing a significant customer, or scaling at a speed that impacts the quality of service. Most business leaders have accepted and understand that the ability to understand, plan, and execute in a world of uncertainty and risk can be a superpower and a path to success. However, there are a set of risks that have always existed around technology that have always existed, but as the importance of technology grows in every business, so does the profile of that risk. What was once something that could be delegated to the IT leaders is becoming a frequent and emphatic conversation around many boardroom tables across the country.

In addition to this, risk is also not just the cost or impact of something bad happening (for example, the threat of a cyber-attack), but also increasingly the risk of inaction (the risk of not changing with the times) is growing in cost and profile. There are entire books and courses dedicated to risk, but in its simplest form, quantifying risk can be defined as the ‘cost of impact x the likelihood of impact’ and if great enough, can require action. The other important consideration when determining risk profile is the cost, effort, or ability to mitigate that risk. To be clear — the best executives are the ones that have mastered this calculation and weigh changing risk and opportunity profiles every day.

In dealing with risk, there are five key ways to handle risk that can be employed. Here is a cheat sheet of how to leverage some of those tools when it comes to technology partnerships:

Accept

The easiest path forward is often acceptance of risks. This is often done with risks of low impact or of low likelihood of occurrence. For example, the risk of an asteroid hitting our house is one we accept, based on the low likelihood of occurrence and the insane cost (if even possible) to try and do anything about that.

Insure

Often, risks that are acceptable can be insured for the off chance that they do happen. This approach historically was the one taken for things like cyber incidents. Insurance can provide a financial safety net that allows a business to recover from an adverse event with minimal financial impact.

Diversify

Diversification involves spreading out risk across various platforms, partners, or products. By not putting all your eggs in one basket, you reduce the potential impact of a single point of failure. For example, utilizing multiple cloud service providers can prevent a complete shutdown if one provider experiences an outage.

Transfer

Transferring risk involves shifting the risk to another party, typically through outsourcing or partnerships. Service partners can absorb certain risks on behalf of your company. For instance, partnering with a managed security service provider (MSSP) can transfer the risk of handling cyber threats to a specialist with the expertise and infrastructure to manage these risks effectively. Similarly, SaaS providers often take on the responsibility of maintaining and securing their platforms, thereby transferring the risk away from your business.

Mitigate

Mitigation involves taking steps to reduce the likelihood or impact of a risk. This can include implementing robust security measures, regular audits, and compliance checks. For example, working with a cloud service provider that offers advanced security features and compliance certifications can significantly mitigate the risk of data breaches.

Bonus: Capitalize

Sometimes, risks present opportunities that can be capitalized on. By strategically investing in new technologies or partnerships, businesses can turn potential risks into competitive advantages. For example, adopting a new technology early on can position a company as an industry leader and provide a significant market advantage.

Leveraging service partners to transfer risk is a strategic approach that can help businesses manage their risk profiles more effectively. By understanding the different ways to handle risk and utilizing partnerships, companies can focus on their core competencies while mitigating potential threats. In a world where technology is integral to every aspect of business, effectively managing risk through partnerships can be a key driver of success.