The Top 4 Tech Risks Revealed by a Technology Due Diligence
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As technology progresses, and software becomes the central tool for managing all business activities, companies are faced with increasing risks and threats to their IT infrastructure. From cyber attacks to data breaches, the consequences of inadequate security measures can be devastating. That is why conducting a Technology Due Diligence is essential for any company that deals with sensitive information and relies on technology to operate.
A Technology Due Diligence involves a thorough evaluation of a company's computer systems, including its hardware, software, and online presence. By conducting this analysis, companies can identify potential vulnerabilities and weaknesses in their IT infrastructure. If we consider the context of an investor preparing to acquire a target company in the tech industry, the Technology Due Diligence may also cover issues linked to software scalability, maintainability, and technical debt.
Risk #1 - Inadequate Online Security Measures
One of the main technological risks revealed by Technology Due Diligence is the presence of inappropriate online security measures. Online security measures include firewalls, encryption, and other protective measures that safeguard a company's online presence. In the absence of appropriate security measures, a company's online presence can be vulnerable to cyber attacks, data breaches, and other online threats, which can not only result in ransom demands but also generate business interruptions that can be ten times more costly than the ransom itself.
An online assessment can be a good starting point for analyzing the potential weaknesses in a company's security measures. A source code analysis will allow companies to go further in the evaluation as it will identify all potential security vulnerabilities in the software and code itself. By analyzing the source code, experts can identify potential security risks and take proactive measures to address them.
Risk #2 - Inadequate Data Protection Measures
Another major technological risk revealed by Technology Due Diligence is the presence of inadequate data protection measures. Data protection measures include encryption, data backup, and data recovery plans that safeguard a company's sensitive information. In the absence of appropriate data protection measures, a company's sensitive information can be exposed to data breaches. If this data is not properly protected and the reporting process following a data breach is not followed (such as reporting the breach to the national cybersecurity agency), the attacked company will then be in violation of the GDPR and may face legal and financial sanctions.
Technology Due Diligence can therefore assess a company's data protection measures and identify potential weaknesses. By taking proactive measures to improve data protection measures, companies can mitigate the risks of data leaks or theft, protect their sensitive information, and remain compliant with GDPR and cybersecurity regulations.
Risk #3 - Inadequate IT Infrastructure
The third most important technological risk revealed by Technology Due Diligence concerns the entire IT infrastructure. IT infrastructure includes an assessment of hardware, networks, servers, software, and whether or not the company is connected to the web. In the absence of a well-designed IT infrastructure, a company's activities can be exposed to downtime, system failures, hacking, and other computer-related problems.
A Technology Due Diligence will identify potential weaknesses in the audited company's IT infrastructure, and adapt the results and level of risk to the context of the audited company (size of the company, performance vs industry standards, what fixes are already in the roadmap). The report will then propose an action plan and suggest a budget. It is then up to the company or its investor to proceed with these investments or not.
Risk #4 - Scalability and Maintainability Risks
Scalability and maintainability risks are important considerations that can be revealed by a Technology Due Diligence. Scalability refers to a company's ability to expand its IT infrastructure as needed, to accommodate growth and changing business needs. Maintainability refers to a company's ability to maintain and update its IT systems to ensure they remain secure, efficient, and up-to-date.
If a company's IT infrastructure is not scalable or cannot be maintained, it may become obsolete, vulnerable to cybersecurity threats, and unable to meet the evolving needs of the business. This can result in system failures that could impact operations and customer satisfaction, and therefore investors.
Vaultinum's Technology Due Diligence solution includes a scan of the source code, which analyzes the effectiveness of the tech team, and how knowledge is shared among developers, to draw concrete and relevant conclusions about the maintainability of the Tech. The evaluation of risks related to scalability and maintainability, and the formulation of concrete recommendations for improvement, help companies stay ahead in technology.
In conclusion, a Technology Due Diligence is crucial for any company that wants to understand and mitigate technological risks and master its technological performance. The four main technological risks revealed by a Technology Due Diligence are cybersecurity risks, RGPD compliance risks, infrastructure, and software scalability and maintainability risks. These risks can have serious consequences on a company's activities, reputation, and financial stability, and can challenge an investor's willingness to confirm their investment in that company. It is therefore essential to regularly carry out Technology Due Diligence to identify potential risks and implement concrete solutions to mitigate them.
Vaultinum's Technology Due Diligence solutions allow for an in-depth evaluation of all technology and software-related risks in terms of cybersecurity, intellectual property, scalability, and maintainability. By partnering with Vaultinum, companies, and their investors, will be better equipped to manage their technology risk and align technology with their long-term growth objectives.
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