With the increasing use of information technology in the activities of banks the system of Technology risk management has become important. The process deals with finding out the weaknesses in a particular operation and then using the most suitable strategy to deal with it.
There is couple of approaches in this case but their use depends on the factor of profitability.
Explanation of Technology Risk Management
The system of technology risk management is used in order to deal with the various risks that may arise in the use of technological tools. This process is especially applicable in case of the banking industry.
It has been observed that the risk management strategies that are useful in other cases are generally not applicable when it comes to technology risk management.
Important Parts of Technology Risk Management
The most important part of technology risk management is to find out the various weak points that are there in the operational system. The technological risks come into play when the banking organizations use the information technology that is at their disposal.
Processes of Technology Risk Management
As far as the process of technology risk management is concerned after the weaknesses are detected the authorities function in order to eliminate them by developing the proper strategy. The banks nowadays work as per three approaches.
These approaches are either used on their own or in combinations.
The approaches may be mentioned as below:
Risk management with the help of internal processes. In such cases controls are extremely important.
Risk transfer by buying insurance coverage
Risk management with the help of outsourcing. In such cases the required work is outsourced to external bodies.
Normally it has been seen that the companies that need to take technology risk management steps opt for any of the above-mentioned steps. All these choices provide the users with specific advantages as well as disadvantages. However, the choice is normally made after judging the profitability of each one of the options.
Last Updated on : 8th July 2013