INSIGHT: Why executives are concerned about Digital Risk

Beyond the hype and hysteria in the press about cybersecurity threats, board members and senior executives are genuinely interested in the IT risks they currently face.

3. Lack of visibility into key business relationships with third-parties

As more companies look to improve the efficiency of their operations, the number of third-party relationships in the form of outsourcing arrangements or technology vendor contracts (i.e. cloud computing) have skyrocketed.

This has increased the level of IT risk exponentially and drawn the focus of industry regulators. Just recently, the U.S. Office for the Comptroller of the Currency issued guidance to financial services companies regarding third-party risk management practices.

Also, the U.S. Department of Health and Human Services just began enforcing new rules under the Health Insurance Portability and Accountability Act (HIPAA) requiring business associates of covered healthcare entities to comply with the act.

So, businesses who provide services such as claims processing or medical records management on a third-party basis are now required to comply on behalf of the healthcare entity they serve. Efforts such as these require greater visibility into the risks associated with third-party technology assets.

4. Growing interconnection between technology and business risks

As my colleague Global Head of Research Peter Sondergaard stated in a recent blog post, “every business unit is a technology start-up.” We are now entering what Gartner calls the digital industrial economy.

In this new economy, technology is becoming the driving force behind business innovation and competitive advantage.

However, without a keen understanding of the risks inherent in the use of these new technologies, what may be the new business driver may also be its death knell.

By John A. Wheeler - Analyst, Gartner

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