SiliconRepublic.com Ireland's Technology News Service

The study of 145 senior executives worldwide, sponsored by German software giant SAP, reveals that only 13pc of these executives have a comprehensive IT risk management structure in place at their companies.

Although they believe senior management is aware of the financial risks associated with IT failure, a mere 11pc describe their company’s handling of IT risk as “highly effective.”

However, IT systems failure is cited as the greatest business risk by 27pc of the executives, 6pc more than the next highest risk - breaches in information security (22pc).

In order to stay competitive companies are being urged to invest in powerful and complex IT systems. However, complexity is likely to increase the risks of IT failure, say the majority of the executives surveyed.

Complexity ranks significantly higher than other factors that might lead to IT breakdown, such as regulatory systems to support data privacy and financial reporting, the expansion of IT outsourcing and the increased use of wireless networks.

Complex IT systems connect all parts of the organisation, vastly expanding the scope of things that can go wrong.

“In spite of this many senior managers still view IT risk merely in terms of security," said Rama Ramaswami of the Economist Intelligence Unit, the editor of the report.

"This perspective is too narrow. IT risk should encompass possible damage to the full range of IT-related activity, including all aspects of business continuity, the impact of delayed IT projects and how IT failure affects customer service, revenue and productivity."

Poor project management is the most common source of IT project failure. This factor is cited by 43pc of executives. It is a particular concern in Europe, where 50pc of executives cite inefficient project management as the primary reason for IT project failure.

Another cause for IT project failure, cited by 21pc of the respondents, is inadequate or loose governance of technical requirements — ie "scope creep" or the addition of more tasks or systems than initially specified — often leading to cost overruns, missed deadlines and loss of the original goals.

IT risk is predicted to increase in the next three years and almost every risk area will pose greater problems in the next three than in the past three.

Some 44pc of those surveyed say they fear increased risk of financial damage due to leakage of sensitive data – more than double the share of executives who cited this in the past three years.

“The report shows that besides thorough operational project risk management, only an integrated approach to governance, risk and compliance will make companies successful at keeping control over their IT,” said Sachar Paulus, chief security officer of SAP.

“The required controls must cover not only purely IT-related activities. One must see the entire picture and integrate physical as well as information security measures adequately,” Paulus warned.

By John Kennedy