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dennis_wenk | 12 Mar 2013 | 0 comments

Information Technology (IT) is tightly integrated with the business; it has transformed the way we do business.  Nicholas G. Carr points out his seminal Harvard Business Review article IT Doesn’t Matter that the capital investment in IT is significant; “nearly 50% of capital expenditures by American companies and more than $2 trillion a year globally are spent on IT. …no one would dispute that information technology has become the backbone of commerce.  It underpins the operations of individual companies, ties together far-flung supply chains, and, increasingly, links businesses to the customers they serve.  Hardly a dollar or euro changes hands anymore without the aid of computer systems”.   Technology is the fundamental infrastructure for the modern business.

Carr continues with; “Today, an IT disruption can paralyze a company’s ability to make products, deliver its services...

dennis_wenk | 08 Jan 2013 | 0 comments

Stakeholders are becoming increasingly concerned about accountability and management of operational risks.  Regulations like HIPAA, Sarbanes-Oxley, and Basel II are placing requirements that are more stringent on corporate governance.  More and more high technology is embedded in the operating fabric of the organization and, in many respects, technology is the organization.  Amazon and eBay are outstanding examples of businesses created by and totally dependent on technology.  It is this reliance on technology and escalating dependency on interconnected infrastructures that has elevated the exposure to business interruptions.  These interdependencies ripple through an organization, as well as outside to major stakeholders:  customers, suppliers, lenders, and partners.

Simultaneously, non-conventional threats such as, denial of service, hacking, and September 11th 2001 changed the very nature of operational risk instantaneously and on a...

dennis_wenk | 05 Oct 2012 | 0 comments

Basel II Accord for International Banking Operational Risk is defined as, “Risk of loss from inadequate or failed internal; processes, people, and systems or external events “.   When Processes, People or Systems fail, whether it be from internal or external events, the losses can be substantial.  As an example, the Ponemon Institute estimates that worldwide organizational are losing over $35 Billion monthly from data center downtime.  Nicholas G. Carr point out in his seminal Harvard Business Review article IT Doesn’t Matter, “today, an IT disruption can paralyze a company’s ability to make products, deliver its services, and connect with its customers, not to mention foul its reputation … even a brief disruption in availability of technology can be devastating.”

There are two primary ways for an organization to increase value.  The first way is to...

dennis_wenk | 05 Oct 2012 | 0 comments

The Effectiveness of internal control systems is now an issue for public policy and formal law. Section 404 of the Sarbanes-Oxley law is aimed at helping companies prevent financial reporting mistakes and fraud. The rule requires companies to include in their annual reports:

  • A statement of management's responsibility for establishing and maintaining "adequate" controls over financial reporting
  • Management's assessment of the effectiveness of the company's internal controls
  • A statement identifying the framework used by management to evaluate the effectiveness
  • An auditor's report on management's evaluation of internal controls
  • Any material weaknesses identified in the internal controls review

While the rule only requires companies to disclose material weaknesses in their annual reports, many companies have begun alerting investors about deficiencies and potential problems. The rule is intended...

dennis_wenk | 04 Oct 2012 | 1 comment

Professor John Graham of Indiana University points out that “large amounts of resources are devoted to slight or speculative dangers while substantial and well-documented dangers remain unaddressed”.  It has been well established that people often too much weight is placed on risks of low probability.  Such is the dilemma of complexity within IT infrastructure.  We often talk about hackers, malware, floods, fires, earthquakes, and tornados; while the real crisis is happening right under our nose and it has well over 5,000 risk signatures.  This crisis is the complexity in the IT infrastructure and it is causing considerable losses for companies.

The likelihood that an organization will experience a catastrophic loss from an IT failure is far greater than any catastrophic disaster or "black swan" event.   IT failures are costing companies trillions of dollars every year; worldwide downtime is estimated at over $35 Billion...

dennis_wenk | 24 Sep 2012 | 0 comments

Operational resilience is the economical balance between an organization’s requirements for service availability and the consequence of an interruption to that service.  The likelihood that your organization will experience a catastrophic loss from a material service interruption caused by an IT operational-problem is far greater than any service interruption being caused by some disaster or ‘black swan’ event.  So if the overarching objective is to protect our organizations from bad events that generate losses then it is time to focus our attention to creating resilient IT operations.   

We live in a technology driven world.  Every possible business processes has been automated; automated to the point where Information Technology is deeply embedded in the operating fabric of our business and the organization is now highly dependent on information technology.  IT has become a microcosm of the organization and it is used to...