Video: IT Risks

In this lesson, explore the multi-faceted world of IT risks with Nick Palazzolo, CPA, who brings both expertise and humor to this critical topic. Nick dives into various types of risks including operating, strategic, information, and competitor risks, articulating how each can impact an entity and its operations. Further, he sheds light on unintentional risks such as software defects and their implications. With practical examples and a touch of wit, Nick clarifies the concept of risk-reward trade-offs and the importance of risk assessment and management in the digital realm. The lesson also covers the role of computerized systems in reducing human error and emphasizes the significance of verifying their accuracy through independent manual checks. Finally, Nick examines actionable strategies to manage risk, distinguishing between high impact and high likelihood scenarios to inform better decision-making in IT risk management scenarios.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Risk is just inherent. It's going to be there. It's going to exist as long as someone or a party or, of course, there's error, but if someone is trying to get at your valuable information or whatever you have, then, yeah, there's always risk that someone's going to try to do harm to your entity. There's always a trade-off between risk and reward. That's true.

If you don't spend any money on data protection, then, yeah, the risk is going to be pretty high. So that's a trade-off. The reward is you don't have to spend a lot of money. If you spend a lot of your money and you don't have as much of it, well, you'll have a lot less risk. That's kind of how it goes.

And planning for risk management includes risk assessment, some risk assumptions to have going forward for this. We have a bunch of types of risks here. I mean, gosh, you thought you saw enough risks with our financial risk management, but here are some IT related risks. Well, operating risk is the risk of doing the right things the wrong way. Story of my life. Whether it's putting together a table or just doing my job, this is a risk in the process, day to day or even period to period. Right? Yeah. I can plug in a microwave. What do you mean it's upside down? What are you talking about?

Strategic risk? This is the risk of choosing the wrong technology for a job. What do you mean? I can't run data models on Microsoft Word. Is that what it's for? Significant deficiency from the beginning, such as choosing the wrong technology for a job that should require another. So you show up to dig the foundation for an 18 storey building

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