Relying on IT

Published on 25 November 2009 by in Risk Management

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Modern businesses depend upon information technologies for nearly every facet of enterprise operations. IT has provided significant productivity and agility benefits to companies that make the investment. However, there are also risks associated with the reliance on IT.

In the 2009 article, “Governing Information Technology Risk,” Parent and Reich discuss the impact of businesses’ reliance on IT when security risks are realized and become issues. (Parent & Reich, 2009) Parent and Reich analyze the role of governance in the mitigation if IT risks based upon a survey of six firms and a review of literature related to IT governance. (Parent & Reich, 2009)

Parent and Reich’s article begins with a review of recent examples of companies that made an investment in IT, but failed to mitigate the risks. As a result, the article illustrates, the firms’ experienced sudden and impactful decreases in market capitalization, especially in the form of decreased stock prices. The authors proceed to describe the role of IT governance in the mitigation of risks associated with relying upon information technologies. Following the description of the types of governance, Parent and Reich explain the selection of firms for their survey and the design of the survey. Finally, the authors analyze the survey results. The article concludes that regardless of the governance model adopted by a firm, the Board of Directors must be an active proponent of the governance initiative. Finally, the authors present two tools to assist Boards with effective governance: a business process called, the “IT Risk Governance Chain,” and a risk taxonomy called, the “Director’s Dashboard.” (Parent & Reich, 2009)

Modern life depends upon information technologies. The dependence upon IT provides significant value, however there are also risks. Researchers like Parent and Reich provide valuable analysis of the benefits of relying on IT, while managing the associated risks. (Parent & Reich, 2009)

References

Parent, M., & Reich, B. H. (2009). Governing Information Technology Risk. [Article]. California Management Review, 51(3), 134-152.

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