Risk mitigation

Inevitably, particularly in the trading/investment banking business, the reliance on
technology can become so great that a firm would like to mitigate its risks. Risk
mitigation can take the form of
Ω Insurance
Ω Allocating the risks to a captive insurance company
Ω Outsourcing to a third party.
When insuring technology it is essential to review the coverage. Examples of items
normally covered are as follows:
Ω Hardware
Ω Loss of software
Ω Reinstatement of data
Ω Consequential business or financial loss
Ω Fidelity bonding
Ω Cost of emergency standby facilities
Ω Cost of software failure
Apart from coverage it is also essential to check that what is included and what
exceptions are stated, e.g. normal wear and tear, telecommunications failure, war/
terrorist damage.
All firms should have a plan which tries to ensure business continuity in the event
of a disaster. In relation to firms totally reliant on technology this is even more
important.