Granting [NT AUTHORITY\SYSTEM] sysadmin on SQL server - Compliance/Best Practice
I assume this is some sort of IT management or monitoring agent, otherwise it shouldn't be running on your SQL Server.

If you don't run any other code as SYSTEM on the server, there's not really a lot of extra risk over and above running 3rd party code with Windows administrative privileges.  If the service runs as any local administrator, it can get access to SQL Server.  

If possible you should do both of: 

1) Grant the service the least privileges is needs to run

2) Provision the login and grant permissions to the per-service SID instead of the service account.  

So if the service is has a Name of 'someservice' (not DisplayName), create a login like:

create login [nt service\someservice] from windows


And grant the permissions to that.  Then other services running under the same service account won't be able to connect to SQL Server.