What is Risk Management in IT? A Practical Guide

17 June 2025 By BOBcloud Team BOBcloud

What is IT Risk Management?

Risk management in IT is the process of identifying threats to technology systems and data, assessing the likelihood and impact of those threats, and implementing controls to reduce them to an acceptable level.

It is not about eliminating risk entirely — that is neither possible nor economically sensible. It is about understanding which risks matter most, and making deliberate decisions about how to address them.

The Risk Management Process

1. Risk Identification

The starting point is identifying what could go wrong. Common IT risks include:

  • Cybersecurity incidents: Ransomware, phishing, data breaches, insider threats
  • Hardware failure: Server failure, storage failure, network device failure
  • Software failure: Application errors, database corruption, OS issues
  • Human error: Accidental data deletion, misconfiguration, lost devices
  • Third-party failure: Cloud provider outage, internet service failure, software vendor issues
  • Physical incidents: Fire, flood, theft, power failure
  • Compliance failures: GDPR breach, failure to meet contractual obligations

2. Risk Assessment

Each identified risk is assessed across two dimensions:

Likelihood: How probable is this risk occurring? This might be expressed as high/medium/low, or as a probability percentage, or as an expected frequency (once a year, once a decade).

Impact: If this risk occurs, what are the consequences? This includes financial loss, operational disruption, reputational damage, regulatory penalties, and legal liability.

Combining likelihood and impact produces a risk rating. High-likelihood, high-impact risks require immediate attention. Low-likelihood, low-impact risks may be accepted without action.

3. Risk Treatment

For each risk, there are four broad treatment options:

Avoid: Change the approach to eliminate the risk. For example, not storing certain categories of sensitive data at all.

Reduce: Implement controls that reduce the likelihood or impact of the risk. For example, multi-factor authentication reduces the likelihood of account compromise.

Transfer: Shift the financial consequences of the risk to a third party. Cyber insurance is an example.

Accept: Acknowledge the risk and decide to live with it, either because the cost of mitigation exceeds the expected loss, or because it is judged sufficiently unlikely or low-impact.

4. Risk Monitoring

Risk management is not a one-time exercise. The threat landscape changes, the business changes, and new risks emerge. Risks need to be reviewed regularly — at least annually, and whenever significant changes occur.

Risk Management Frameworks

Several established frameworks provide structure for IT risk management:

ISO 27001: The international standard for information security management systems (ISMS). Includes a risk assessment and treatment process as a core requirement.

NIST Cybersecurity Framework: A widely-used US framework that organises security activities around five functions: Identify, Protect, Detect, Respond, Recover.

Cyber Essentials: A UK government-backed scheme that addresses five key security controls. Mandatory for some government contracts and a good baseline for SMBs.

Backup and Disaster Recovery as Risk Controls

Backup and disaster recovery are among the most important risk controls in any IT environment. They address two of the highest-impact risks: data loss and extended downtime.

A well-designed backup strategy reduces the impact of ransomware (you can restore rather than pay), hardware failure (data is preserved), accidental deletion (point-in-time recovery is available), and many other incidents.

The key attributes of effective backup as a risk control:

  • Independence: Backups stored separately from primary systems, ideally offsite and on a different network
  • Frequency: Backup runs frequently enough that the RPO (data loss window) is acceptable
  • Completeness: All critical data is included — not just servers, but Microsoft 365, cloud applications, and endpoints
  • Tested: Restores are regularly tested to confirm backups are usable
  • Monitored: Backup job success or failure is monitored, and failures are acted upon

For MSPs: Risk Management as a Service

MSPs are well-positioned to help clients understand and manage their IT risks. This might take the form of a formal risk assessment as part of an onboarding process, an annual review as part of ongoing service, or specific deliverables like a business impact analysis or disaster recovery plan.

Clients who understand their risk exposure are better positioned to make informed decisions about the controls they invest in — and are more likely to appreciate the value of the managed services they are receiving.

BOBcloud supports MSPs in delivering one of the most important IT risk controls — managed cloud backup with monitoring, testing, and clear SLAs. Find out more about becoming a BOBcloud reseller.