The field of business, especially the one in which the companies offering services and products in the IT area operate, is subject to certain specific risks, which could significantly affect the chances of profit, if the decision-makers do not take measures to identify them and for reducing them by resorting to various solutions. The economic, technological, operational, financial and legal environment is a source of such problems that must be taken seriously and addressed in such a way as to reduce the chances of their occurrence or, if they do occur, the effects should be minor and easy far away.

The article below provides useful information to IT managers and entrepreneurs regarding the issue of risks in business, both from a general point of view and regarding their field of activity. Thus, it will be discovered what risk means in a business and why it is important to identify risk situations.

In addition, it will be possible to consult a list of the main types of risks to which businesses in the IT field are subject, as well as useful solutions for their management, especially from the point of view of specialized insurances intended for this field.

1. Business risks – what do they represent and why is it important to identify them?

Businesses are a part of the economy subject to the occurrence of unexpected circumstances and risks with unwanted consequences, which negatively influence business performance, prevent the achievement of the proposed objectives and endanger the profitability of the organization. Risks are present in any company and in various economic sectors, so there may be risks in the construction business or in agriculture.
But these risks are especially present in those areas where major changes occur unexpectedly, the IT field being from this point of view a sensitive one and one in which the solutions are more difficult to apply.

1.1. The risks of a business – what are the risks and when can they appear?

Business risk is identified in specialized economic studies as the increased probability of the occurrence of unwanted or uncertain events, which can affect the financial and operational aspects of a company. Considering the complexity of the business world, these risks can come from a variety of sources, such as changes in the economic environment, the emergence of disruptive technologies, more or less fair competition, intentional or unintentional violations of laws or criminality.

The same studies specify how important a correct and objective assessment of the field is for the proper identification of risks, planning ahead of time in order to correctly address unwanted situations, as well as taking those measures that allow the negative effects that result in these cases to be kept under control.

1.2. Risks in an IT business – the importance of their identification

The importance of identifying risks in business is significant in any field, even more so in the IT field, in which certain elements are involved that could lead to extremely destructive effects, even in the case of the smallest mistakes. Among the reasons that can be highlighted in this regard are:

• IT companies work in most cases with valuable and sensitive data and information at the same time. Customers entrust IT companies with elements that should not be public, because their businesses would suffer. The way of keeping these data on electronic media makes them sensitive to cyber attacks and, for this reason, companies in the IT field must identify possible risks in time to take the necessary measures to prevent unauthorized access to information;
• In the event of unforeseen events, such as technical failures or cyber attacks, IT companies could have their operations disrupted, and there is even the possibility of going bankrupt. By taking measures to identify risks, the continuity and availability of the services offered to customers can be ensured;
• Security breaches in the IT field have proven over time to be elements that affect a company’s reputation. In order to avoid losing the trust of current and potential clients, a correct risk management is necessary from all points of view;
• The IT field is subject to special legislation. The GDPR type regulations are mandatory to be respected and addressed the correctness of the risk domain exempts the violation of these principles and the avoidance of stinging sanctions.

2. Types of risks in IT businesses

Businesses in the IT field are extremely complex due to the technology involved and the presence of diverse clients, both in terms of the type of industry in which they operate, as well as the size of this business.
Thus, companies of this type are subject to a variety of specific risks, each of which must be taken into account and addressed in such a way that the chances of occurrence are reduced to a minimum and if, nevertheless, they occur, the consequences are approachable and not to cause significant losses.

2.1. Technological risks in an IT business

Technology is a significant part of IT business, which is why technological risks are the most dangerous, with the most serious consequences. To minimize risks, companies must implement cyber security programs, take into account changes in the infrastructure field to bring it to the highest levels and permanently monitor the way the systems work.

Among the common risks that must be taken into account through planning and an integrated approach are:

• Technical failures are the most frequently encountered risks, they can occur both in the hardware and in the software field. The first category includes the appearance of failures of servers, network equipment and memory media, which can lead to the interruption of services intended for customers or even irreparable data loss. Software failures are caused, in particular, by programming errors, the consequences of which can sometimes be complex and difficult to fix;
• Another technological risk is related to cyber security. The servers of IT companies are sensitive to attacks, such as hacking, malware, ransomware or phishing;
• Among the examples of risks that can often be encountered are those of human errors in terms of system administration or data management. Human error can be caused by the lack of experience of some employees or the extreme fatigue to which workers in this field are often subjected.
• The measures that must be taken to manage technological risks are related to the implementation of strong cyber security systems, as well as the provision of a data backup, so that they can be recovered without problems in the event that access is lost done in the usual way.

2.2. Operational risks and human resources in an IT business

The operational and human resources field is a sensitive one in IT-type businesses, because it offers the possibility of producing unwanted consequences, if the decision-makers do not identify problematic situations in time and do not take the necessary measures for their management.

Among the operational risks are the occurrence of human errors, the existence of an outdated technological infrastructure, which does not face current challenges and offers low performance, as well as numerous vulnerabilities and dependence on third parties that lead to the appearance of risks regarding the security and stability of the company.

Human resources risks are equally important, especially in terms of staff recruitment and retention. The IT field is characterized by strong competition in terms of obtaining access to talented and experienced employees. Many times, it is possible to lose some specialists who have acquired a rich experience in the company, which another company will enjoy.

The loss of employees with valuable knowledge is in many cases hard to bear, because the replacements do not always have all the necessary knowledge for the normal continuation of operations. We must not forget the possibility of internal fraud, which could lead to significant consequences.

Among the measures that must be taken to minimize these risks are the implementation of solid management practices and the development of a positive relationship between management and employees.

2.3. Financial and market risks in an IT business

Financial and market risks can have negative consequences in IT businesses. Among the examples that must be properly addressed are the high costs of financing such a business, avconsidering that the last generation technology is very expensive, but necessary, for the company to remain relevant in relation to the competition.

As far as the market is concerned, the field is characterized by a very strong competition, which activates both small but very innovative companies, as well as multinationals that have a crushing economic power. Profitability can thus be affected by the loss of customers who choose other companies or by the obligation to lower prices in order to keep them.

Among the solutions that can be applied in this sense is the constant monitoring of the market to identify the relevant information and the diversification of the services offered, especially through the use of new technologies, which could attract.

3. Business risks and the importance of professional liability insurance for IT companies

Insurances are valuable tools in the field of business, they can represent ideal methods of correct approach to some unexpected events, with negative consequences. The companies active in this general field of insurance have developed specific services, addressed to companies in the IT field, which differ from the normal ones through the special tools incorporated.

The insurances offer financial protection and allow the quick resumption of the activity in case of major damages for various reasons, such as security or those involving human error. Studies have shown that IT companies that use specialized insurance have a better reputation, which can be seen by the trust given by business partners and clients. They know that the company is prepared to face unforeseen events and that it will not be necessary to look for another provider of services and technologies.

Companies in the IT field have at their disposal a rich offer, the choice to be made by taking into account some essential criteria. Among them is, in particular, the company’s ability to cover a variety of risks. Insurances are useful in various fields, and among the examples can be mentioned IT professional liability insurance, construction insurance or agricultural insurance, with the help of which risks are managed in these branches of economy.

Other criteria that must be taken into account are:

• Availability of complex policies, which cover many elements, such as professional liability, general liability, cyber and cyber crime, as well as employer liability;
• Possibility of insuring any company, regardless of the legal form of organization (PFA, SRL or SA);
• Variable liability limits, depending on needs;
• The policy coverage must be valid at national and international level (this element is beneficial in the case of concluding contracts with companies from abroad, which require the existence of liability insurance);
• The insurance company must be one that has proven its responsibility, in this sense, ratings granted on the international insurance market can be consulted.

IT entrepreneurs must know that specialized insurances offer complete and complex coverage for the entire activity. Examples of risks included include cover for damage caused by cyber attacks, damage caused by human error (misuse, employee negligence, loss of valuable data), cover for electronic equipment, loss or theft of documents.

In conclusion, IT companies must approach business risks in such a way as to reduce their occurrence or, if they do occur, to use tools, such as insurance, to quickly solve problems.

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