5 - Information technology risk

Abstract

This chapter focuses on attention technology risk—that is, information technology (IT) risk. The chapter explores the relations of IT risks with financial institutions. The subjects range from operational risks associated to trading, payments, and settlements to operational risks resulting from system unreliability as well as from outsourcing and insourcing. The chapter explains the reasons for IT risks and suggests ways to bend the curve of IT-related operational risks. All automated processes are exposed to technology risk. Therefore, to study the operational risks associated to IT, it is essential to identify and make an inventory of the contents of computer applications, data based information, basic software endowment(s), and physical network(s). It is essential to get rid of old structures that limit the ability to obtain results, and cost too much for the service they provide. The new master of the technological domain is system solutions, which require both insight and foresight. Experience should be used in a productive and pragmatic way. The acquired know-how should be applied to the job; it should not be left as a theory.