Technology Risk Management Primer for Portfolio Companies (Part 1)
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 as well as the eventual valuation of the portfolio investment. 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.
I.T. Risk Management Primer
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 business. Since risk management is the identification and control of threats that can impact an organization, few things can affect it more than a loss of data or communications.While many organizations have a designated risk management officer, that officer may not have specific exposure to the management of technology operations. Nor is it the case that all technology managers have extensive understanding of the tenants of risk management. The components of a generalized risk management plan can be found in many well written articles in publication or online; however, the purpose of this article is to provide a step-bystep framework for the technology executive or risk manager charged with developing an IT risk management assessment and plan for their organization with specific focus on actionable items and reporting procedures to ensure a successful project.
A well executed risk management plan for information technology is primarily a linear process with a focus on the completion of each step as a prerequisite. A recurring theme is the necessity to define terms, methodologies and goals throughout the process in order to maintain a structured and focused plan. It is for this reason that the methodology is presented in the form of the TRMP (Technology Risk Management Plan) Step-Ladder (see below) as each step in the process creates a foundation that enables the next step along a gradual move towards completion.
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