A Guide to IT Risk Management for Small Businesses

Cyber threats for small businesses are everywhere today. 43% of cyberattacks were against small businesses. And the impact of a breach on a small business can be devastating. Yet, only 14% of small businesses are prepared to defend themselves against cyberattacks.

It’s critical for businesses to be proactive about cybersecurity. Doing so is key to ensuring business continuity and protecting against losses.

Read on to learn the specific steps your small business can take to manage IT risk and protect against attacks, including how to do a basic risk assessment.

Quick IT Risk Management Checklist for Small Businesses:

1. Identify and inventory IT assets
2. Perform a risk assessment
3. Prioritize risks (High/Medium/Low)
4. Create a risk mitigation plan
5. Implement cybersecurity measures (e.g., MFA, backups)
6. Train employees in cybersecurity best practices
7. Schedule regular reviews and updates

The Consequences of Ignoring IT-Related Risks

Small businesses face an array of IT-related risks. They include cybersecurity threats, data breaches, system failures, and compliance challenges. All of these issues can disrupt business operations, costing money, downtime, and the trust of customers.

A cyberattack that results in data loss can actually sink a small business. Even if it doesn’t, the company may lose customers who don’t feel they can trust a business struck by ransomware or a breach.

Failing to maintain equipment, track and update licenses, or upgrade and patch software can result in security holes, slow performance, and even system failures causing you to lose access and, consequently, money. Failure to comply with security regulations can also result in significant fines.

That’s why it’s so important to act preemptively to protect against IT risks.

Anticipating IT Risks

Anticipating IT risks is about identifying potential vulnerabilities before they become critical issues. For small businesses, this means adopting a proactive approach rather than waiting for problems to arise. Here’s how small businesses can effectively anticipate IT risks:

• Conduct Regular IT Risk Assessments: Begin with a basic risk assessment, and then schedule routine evaluations to identify vulnerabilities in software, hardware, and network systems.
• Monitor Emerging Threat Trends: Stay informed about new cybersecurity threats and IT vulnerabilities through industry reports, threat intelligence feeds, and updates from cybersecurity authorities.
• Employee Training Programs: Conduct regular training sessions to educate employees so they can identify phishing emails, secure their devices, and practice safe password habits.
• Use Monitoring and Detection Tools: Invest in tools like Intrusion Detection Systems (IDS) and Endpoint Detection and Response (EDR) platforms to detect unusual activity in real-time.
  • An IDS monitors network traffic for suspicious activity or known threats, and then alerts the system administrator.
  • EDRs monitor and analyze activities on endpoints, like computers, laptops, or smartphones. They detect, investigate, and respond to potential threats in real-time.
• Leverage Automation and AI: Use Artificial Intelligence (AI) tools to analyze patterns, predict risks, and flag anomalies across your IT systems. Many new AI tools provide sophisticated detection and risk assessment.
• Develop a Threat Response Plan: Have a plan in place to respond to potential threats quickly and efficiently, minimizing disruption. to potential threats quickly and efficiently, minimizing disruption.

By combining human vigilance with advanced tools and technologies, small businesses can stay ahead of evolving IT risks and protect their operations.

Conducting an IT Risk Assessment

Performing a comprehensive IT risk assessment is the first step in developing a robust IT security strategy. Here’s how to do a basic IT risk assessment.

Step 1: Identify Your IT Assets

List:

• Hardware assets (i.e., servers, laptops, routers).
• Software assets (i.e., operating systems, CRM tools, security software).
• Critical data assets (i.e., customer data, financial records).
• Network assets (i.e., Wi-Fi networks, cloud services).

Then, assess the financial cost of losing the asset, how critical it is to day-to-day operations, the type of data the asset holds, and the consequences of losing or compromising the asset (such as legal or compliance repercussions).

Assign value and a criticality rating to each asset and document the inventory and rankings, for instance in a spreadsheet like this:

 

Asset Category	Asset Name	Value to Business	Sensitivity of Data	Consequences Level
Hardware	Main Server	High	High	Critical
Software	CRM Tool	Medium	Medium	Moderate
Data Asset	Customer Database	High	High	Critical

This tells you what assets you have and the importance of each.

Step 2: Identify Potential Threats

For each asset, identify potential threats (i.e., data breach, hardware failure, ransomware). Map each threat to an asset, and ask:

• Who could pose a threat to this asset? (i.e., hackers, insiders, third-party vendors).
• How likely is this threat to occur? (Low/Medium/High).
• What impact would this threat have on this asset? (Low/Medium/High).
• What can I do to mitigate the risk to this asset?

Then, document threats in a risk matrix.

Asset Name	Threat Description	Likelihood (L/M/H)	Impact (L/M/H)
Main Server	Ransomware Attack	High	High
CRM Tool	Unauthorized Access	Medium	High
Customer Database	Data Breach	High	High

 

Step 3: Evaluate and Prioritize Risks

Next, evaluate and prioritize risks. Start by looking at each threat’s likelihood and impact, using the formula Risk Score = Likelihood × Impact.

Document priority levels (High/Medium/Low). Focus on risks that are high-likelihood and high-impact, first (they will come out as High priority, using the above formula). Then, create a prioritization matrix.

Asset Name	Threat Description	Likelihood (L/M/H)	Impact (L/M/H)	Overall Risk
Main Server	Ransomware Attack	High	High	High
CRM Tool	Unauthorized Access	Medium	High	Medium
Customer Database	Data Breach	High	High	High

 

Mitigating IT Risks

Once you have a risk matrix, you’re ready to begin taking action to mitigate your IT risk. Using the risk prioritization matrix you created, make an action plan. Depending upon the asset and risk, there are many possible actions you can take to mitigate risks. Some of these include:

• Enabling Multi-Factor Authentication (MFA).
• Conducting employee cybersecurity training.
• Implementing data backup and recovery plans.
• Use monitoring and/or AI tools (i.e., IDS, EDR).
• Applying necessary updates and security patches.

Document your plan in the matrix.

Asset Name	Threat Description	Overall Risk	Mitigation Plan
Main Server	Ransomware Attack	High	Implement antivirus, regular backups
CRM Tool	Unauthorized Access	Medium	Enable MFA, strong passwords
Customer Database	Data Breach	High	Encrypt data, limit access

Document your findings in a risk assessment report and share them with key stakeholders. Get buy-off to begin mitigation.

Implement and Monitor your Risk Mitigation Plan

Once you have a plan, it’s a matter of implementing the findings, starting with the highest priority (most at risk) assets. Document your efforts and their status, as you work your way through the list.

Risk mitigation isn’t a one-time activity. It’s an ongoing task. You’ll want to schedule quarterly reviews and updates. You should also plan on testing data recovery and incident response plans regularly.

Lastly, make sure you’re staying updated on emerging cybersecurity threats and tools for thwarting them, so you can implement the latest protections.

Conclusion

IT risk management is no small task, but even small businesses need to do it. By being proactive and taking a methodical approach, you can reduce your chances of a devasting attack, breach, or systems failure.

IT risk management is not just for large corporations. It’s a business survival strategy for companies of all sizes. By taking a proactive approach, small businesses can secure their operations, customer trust, and long-term success.