5A.6. Information Technology Risk and Controls

Information Technology (IT) Management is a critical business function that involves overseeing and controlling the information technology resources of an organization. These resources may include computer hardware, software, data, networks, and data centre facilities. IT management aims to ensure that all technological resources are utilized efficiently, securely, and in alignment with the organization’s strategic goals. The primary activities in the IT management process include:

• IT Strategy and Planning: This foundational step involves developing an IT strategy that aligns with the organization’s overall strategic objectives. It includes identifying how technology can support business goals, planning technology investments, and setting priorities for IT projects. Effective IT strategy and planning ensure that IT initiatives drive value for the business and are responsive to changing market and technological landscapes.
• IT Governance and Policy Development: Establishing a framework for IT governance is essential for ensuring that IT resources are used responsibly and in a way that adds value to the organization. This includes developing policies and procedures for IT usage, security, data management, and compliance with regulatory requirements. Good governance ensures that IT decisions are transparent, risks are managed effectively, and resources are allocated optimally.
• Systems Development and Implementation: This involves selecting, developing, or implementing information systems to meet the organization’s needs. Activities include software development, purchasing or licensing software solutions, integrating new and existing ones, and deploying these systems across the organization. Effective development and implementation of systems enhance operational efficiency and support business processes.
• Network and Infrastructure Management: Managing the organization’s IT infrastructure ensures reliable access to information and technology resources. This includes managing hardware components (servers, computers, networking equipment), software applications, and network protocols. Infrastructure management ensures the smooth operation, optimal performance, and security of IT systems.
• Cybersecurity and Risk Management: Protecting the organization’s information assets from cyber threats is critical to IT management. This involves implementing security measures such as firewalls, antivirus software, intrusion detection systems, and encryption technologies. Regular risk assessments and updates to security protocols are necessary to address emerging threats and vulnerabilities.
• Data Management and Analytics: Managing the organization’s data assets involves ensuring the accuracy, accessibility, and security of data. It also includes analyzing data to gain insights supporting decision-making and strategic planning. Effective data management and analytics enable organizations to leverage their data for competitive advantage.
• User Support and Training: Providing support to users of IT systems and training them on how to use these systems effectively is essential for maximizing the value of IT investments. This includes help desk services, user manuals, and training programs. User support and training help reduce downtime, increase productivity, and ensure that employees can leverage IT resources effectively.
• Vendor and Project Management: Managing relationships with IT vendors and overseeing IT projects are essential for ensuring that technology solutions meet the organization’s requirements and are delivered on time and within budget. This involves negotiating contracts, managing service-level agreements (SLAs), and applying project management methodologies to ensure successful outcomes.
• Disaster Recovery and Business Continuity Planning: A critical responsibility is to prepare for potential IT disasters (such as system failures, data breaches, or natural disasters) and ensure that the organization can continue operations in the event of such incidents. This includes developing disaster recovery plans, data backup strategies, and business continuity plans.

Let’s review the top three information technology risks and their impact on the organization. We will also take an inventory of the top three preventive, detective, corrective, and accounting controls related to each risk.

Cybersecurity Threats

Risk Impact

Data breaches, financial losses, and reputational damage. Cybersecurity threats, such as malware, phishing attacks, and data breaches, can result in unauthorized access to sensitive information, financial theft, and erosion of customer trust.

Preventive Controls

• Network Security Measures: Implement firewalls, intrusion detection systems, and encryption protocols to safeguard network infrastructure and data from unauthorized access and cyber threats.
• Security Awareness Training: Providing cybersecurity awareness training to employees to educate them about common threats, phishing techniques, and best practices for data protection and incident reporting.
• Vulnerability Management: Conduct regular vulnerability assessments and patch management to identify and mitigate security vulnerabilities in IT systems and applications.

Detective Controls

• Security Incident Monitoring: Monitoring network and system logs for suspicious activities, anomalies, or indicators of compromise that may signal a cybersecurity incident or breach.
• Intrusion Detection Systems: Deploying intrusion and prevention systems to detect and block malicious activities and unauthorized access attempts in real time.
• Security Information and Event Management (SIEM): Implementing SIEM solutions to centralize and analyze security event data for early detection of cyber threats and effective incident response.

Corrective Controls

• Incident Response Plan: Activating a predefined incident response plan to contain and mitigate the impact of cybersecurity incidents, including containment measures, data recovery procedures, and communication protocols.
• Forensic Investigation: Conduct forensic analysis and investigation of cybersecurity incidents to determine the cause and extent of the breach and potential data exposure.
• Incident Reporting: Promptly report cybersecurity incidents to relevant stakeholders, regulatory authorities, and law enforcement agencies as required by data protection laws and regulations.

Accounting Controls

• Cyber Insurance: Obtaining cyber insurance coverage to mitigate financial losses and liabilities associated with cybersecurity incidents, including data breach response costs, legal expenses, and regulatory fines.
• Business Continuity Planning: Developing and implementing business continuity and disaster recovery plans to ensure IT operations and services continue during a cybersecurity incident or breach.
• Legal Consultation: Seeking legal advice and guidance to assess the legal implications of cybersecurity incidents, comply with data protection laws, and manage potential liabilities and regulatory sanctions.

Non-compliance with Data Privacy

Risk Impact

Regulatory fines, legal liabilities, and loss of customer trust. Non-compliance with data privacy regulations, such as GDPR and PIPEDA, can result in significant financial penalties, legal actions, and reputational damage due to mishandling of personal data and privacy breaches.

Preventive Controls

• Data Privacy Policies: Establishing comprehensive data privacy policies and procedures to govern personal data collection, processing, and storage in compliance with applicable regulations and industry standards.
• Privacy Impact Assessments: Conducting privacy impact assessments (PIAs) to evaluate the privacy risks and implications of new projects, systems, or processes involving the processing of personal data.
• Data Subject Rights Management: Implementing processes and mechanisms to facilitate data subject rights, including access, rectification, erasure, and portability, by data protection laws and regulations.

Detective Controls

• Data Privacy Audits: Conduct regular audits and assessments of data privacy practices, controls, and compliance with regulatory requirements to identify gaps and areas for improvement.
• Review of Privacy Agreements: Reviewing and updating privacy notices, consent forms, and data processing agreements to ensure transparency, accuracy, and compliance with data privacy regulations.
• Data Protection Impact Assessment (DPIA): Performing DPIAs for high-risk data processing activities to assess and mitigate privacy risks and ensure compliance with GDPR requirements.

Corrective Controls

• Data Breach Response Plan: Activating a data breach response plan to promptly respond to and contain data breaches, including notification of affected individuals, regulators, and other stakeholders as required by data protection laws.
• Incident Response Training: Providing training and awareness programs to employees on data breach response procedures, incident reporting, and escalation protocols to ensure timely and effective responses to data privacy incidents.
• Privacy Incident Investigation: Conduct thorough investigations of privacy incidents, breaches, or complaints to determine their cause and impact and actions for remediation.

Accounting Controls

• Remediation Measures to Ensure Regulatory Compliance: Implementing corrective actions and remediation measures to address deficiencies identified in data privacy audits, assessments, or regulatory inspections, including process improvements, policy updates, and staff training.
• Notifications of Data Breaches: Notifying affected individuals, regulatory authorities, and other stakeholders of data breaches according to data protection laws and regulations to meet legal obligations and mitigate potential liabilities.
• Litigation Management: Managing legal proceedings, disputes, or regulatory inquiries related to data privacy compliance, including legal representation, settlement negotiations, and litigation defence.

IT Governance and Controls

Risk Impact

Inefficient IT operations, increased security risks, and regulatory non-compliance. Inadequate IT governance and controls can lead to poor decision-making, ineffective risk management, and vulnerabilities in IT systems and infrastructure.

Preventive Controls

• IT Governance Framework: Establishing an IT governance framework, including policies, processes, and structures, to align IT strategies with business objectives, ensure accountability, and mitigate risks.
• IT Risk Management: Implementing an IT risk management framework to identify, assess, and mitigate IT risks and vulnerabilities that may impact business operations and objectives.
• IT Compliance Program: Developing and implementing an IT compliance program to ensure adherence to regulatory requirements, industry standards, and internal policies governing IT operations and security.

Detective Controls

• Monitoring IT Controls: Monitoring and reviewing IT controls and processes to ensure effectiveness, compliance with policies and standards, and alignment with business objectives and regulatory requirements.
• Detecting IT Security Incidents: Deploying security monitoring tools and technologies to detect and respond to security incidents, anomalies, and threats in IT systems and networks.
• IT Performance Metrics: Establishing and tracking key performance indicators (KPIs) and metrics to assess the effectiveness, efficiency, and reliability of IT operations, services, and controls.

Corrective Controls

• IT Incident Response Plan: Activating an IT incident response plan to address and mitigate the impact of IT incidents, breaches, or disruptions, including escalation procedures, communication protocols, and recovery measures.
• Investigating IT Security Incidents: Conduct investigations of IT security incidents, violations, or vulnerabilities to determine their cause and impact, as well as necessary remediation actions.
• IT Compliance Reviews: Conduct periodic reviews and assessments of compliance with regulatory requirements, industry standards, and internal policies to identify gaps and areas for improvement.

Accounting Controls

• IT Governance Remediation: Implementing corrective actions and improvements to enhance IT governance processes, controls, and structures based on findings from governance assessments and reviews.
• Remediation Measures for IT Security Incidents: Implementing remediation measures and controls to address weaknesses, vulnerabilities, and gaps identified in IT security incident investigations and reviews.
• Remediation of IT Non-compliance Issues: Addressing deficiencies and non-compliance issues identified in IT compliance audits, assessments, or regulatory inspections through process improvements, policy updates, and staff training.