What Is the Difference Between “Risk Management” and “Technical Debt Management“?

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Information technology plays a crucial role in the success of many businesses. Companies rely on IT both in day-to-day operations and more challenging tasks. IT increases the efficiency of businesses, saves money, drives innovation and enables companies to stay ahead of their competitors. Therefore, it is very important to ensure the continuous and effective work of the IT systems.

What is risk management?

As IT systems become more complex and error-prone, many threat scenarios with high risks emerge. IT risk management is aimed at identification, evaluation, analysis, and mitigation of potential risks. The idea of risk management is to monitor the system throughout its lifecycle and provide solutions and plans of action for possible bad scenarios. This ranges from the conception of the project, through the development and implementation of the software, and all the way to the operation and decommissioning of the systems.

If ignored, technical issues can cause serious harm to businesses. This ranges from slowing in production to loss of revenue or even to the existential threat to the company. 

There are numerous types of IT risks such as hardware and software failures, spam, malicious attacks, viruses, data loss, data misuse or data espionage. Usually, IT management focuses on two types of risks such as malware or data loss. This often leads to the neglect of other types of risks, which in turn can cause harm to your business. There are a lot of issues that shouldn’t be ignored, and one of them is technical debt. 

What is technical debt?

How do we define tech debt? Technical debt is a metaphor that is used to describe the imperfection of the code quality. For example, sometimes a team of developers makes some code shortcuts just to meet a deadline or to speed up time-to-market and let the company deliver the product quicker. Often the end justifies the means, but when developers make those suboptimal decisions they build up debt. And like with monetary debt, they should pay it in the future but together with interest. In this case – it is the time and effort to improve the code in order to make it efficient.

What can be said about technical debt infrastructure? Tech debt can be caused by both intentional and unintentional factors. The intentional causes include time constraints, source code complexity, coding rules violations, unclear communication and wrong assumptions due to the lack of technical knowledge, etc. And unintentional causes of technical debt can be a result of planning or lack of coding standards and documentation due to the immaturity of the company. It is also can be caused by the scarcity of knowledge, experience, and skills of the junior professionals.

Be proactive about technical debt. Get an analysis of your codebase.

What are the risks of tech debt?

Even though the tech debt is not necessarily a bad thing, it is always a good idea to find ways how to reduce technical debt. First of all, it bears the delivery risk. The accumulation of a large amount of tech debt can sometimes be a cause for development team to miss its deadline. But even if the product is released in time, a substantial amount of tech debt may have a big negative impact on the ability to meet clients needs. 

High tech debt leads to reduced code quality, additional strain for developers and testers, as well as to a volatile performance and drained innovation. Technical debt can also lead to cost overruns. A recent study conducted by Stripe and Harris Poll says that companies lose upward of $300 bln a year paying down tech debt, as they spend their resources to fix the flaws of legacy systems or the consequences of bad software.

It is clear that tech debt, when it gets out of control, creates significant risks for the company’s business activities and its future. Therefore, detecting, mitigating and eliminating technical debt should be one of the priorities of any organization. By taking tech debt seriously and addressing tech debt issues through risk management techniques companies stand a good chance to avoid many of the problems businesses face.

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