IT Risk Management for Portfolio Companies


Private equity and venture capital firms often face the threat of risk within their portfolio companies, but are not always certain of their portfolio firm’s competency in this area. Risk Management within Information Technology is especially critical as it affects all operations and the eventual value of a portfolio company. CSC, Inc. specializes in helping investment firms make the best technology decisions for their portfolio company’s technology needs.
This article serves as a primer for PE & VC firms who must ensure that their investments are secure and may need to proactively engage the IT management of their portfolio company. This primer can act as a template for those IT managers that are tasked with developing an IT risk management plan and who need guidelines for the process. It will also provide examples of how to implement each step and a validation structure for the investment firm to follow the process.

The pervasive nature of technology has increasingly made information the most valuable commodity for the majority of modern organizations. It is because of this that information itself has become one of the most prevalent areas of focus regarding the management of risk within any enterprise-level organization. Since risk management is the identification and control of threats that can impact an organization, few things can affect an organization more than a loss of data or communications.

I have handled several projects involving implementing an IT-focused risk management plan and it is critical that a well-conceived and organized approach be taken. This allows a stable flow of operations and a healthier, more profitable company.

Here are the basic steps I would summarize the process into and how it involves managing the data necessary to manage the risk in the IT department:
  1. Preparation - gathering the data to ensure a comprehensive and informed process
  2. Identification - organizing the data and understanding the risks
  3. Assessment & Prioritization - processing the data to establish what happens & when
  4. Planning - applying the data for an effective process
  5. Implementation - leveraging the data to address the risks
  6. Finalization - communicating results from the data to the organization
An effective and robust IT risk management plan allows for more confidence from stakeholders and allows for more resources to be allocated to being successful. I highly recommend a thorough audit and risk management plan to any private equity and venture capital firm that recently acquired a new portfolio company. For the complete article, click here.

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