Software failure can cause a leakage of important customer data. Application errors may block the order sent to the customer. Failure or service disruption can block filling of an online booking form. These examples prove that risk management is critical for the business of a company dealing with IT projects. How these risks may be managed by your IT-contractor? Read below and ask your IT-provider tp protect your project.

How does your IT-contractor manage risks?

“Normally an IT company takes care of risk management for the project. It protects from account database breakdowns, data loss, failure of IT company or any of its employee to fulfill its obligations etc. It is the job of the project manager, who has to manage the risks, to prevent and respond properly,"- says Ruslan Olkhovsky, Softengi's managing partner.  

There are three ways to insure against IT project risks: 

1. The customer insures the risks and responsibilities as a separate article in the contract with an IT contractor. It is called Service Level Agreement (SLA) and is typically used to support and maintain systems, as well as in IT business processes outsourcing. 

"SLA approach to IT service management includes tackling non-standard situations, problems, changes, releases, inappropriate service level etc. In SLA you have prescribed all the necessary rules to respond to the problem as well as detailed who has to respond, how and what has to be done in any situation". 

2. You can also use financial guarantees. This option assumes that IT projects involve a bank guarantee (in case of failure the bank covers the risks) or the insurance amount of the project is blocked at the bank account. 

3. IT project insured by an insurance company. The downside of this option is the automatic increase of the project amount and in this case the insurance may be not beneficial for the customer. 

What the IT project risk management brings

The world's risk insurance practice of IT companies includes protection against data loss, when insurance protection against unforeseen costs due to data loss is provided by an IT company. Cyber-bullying insurance helps to cover the costs incurred as a result of computer extortion. The computer data liability insurance covers damage or loss of data, as well as the inability to use, access or control data due to physical property damage. 
Any of the above-written options will protect the customer and the contractor from most failures of an IT project. The easiest and cost-efficient way is to include an expanded article about responsibilities of the parties in the contract. We highly advise you to consider the issue of project insurance with any option described above and protect yourself from most possible risks.  

Picture above:
by Jason Ford. The guy in the picture is having hard times with data leakage due to application error. We suppose that he was not insured.