In today’s world, companies of all sizes, industries, and levels of influence must face the reality of the pervasive nature of cyber threats and risks. The negative impact of a cyber incident on a business can range from a temporary disruption of services to a complete loss of public trust and confidence. The development and use of information technology systems by organizations is key to achieving their objectives and reaching their goals. Organizational success is therefore dependent on a reliable and secure use of IT systems.
Every organization is exposed to cyber risks and threats. The difficult part is deciding which risks and threats merit the most attention, how severe they can be, and how to best respond to them. Organizations can develop a structured approach to identifying important assets and understand what threats and risks can impact them. They can put in place appropriate controls to protect the asset and monitor the threat environment.
Not all controls will eliminate a particular threat to an asset. Rather, the organization focuses on identifying those risks that are most likely to impact the business, and how they will best respond to the risks. This makes cybersecurity an integral part of overall business risks, threats and decisions.
The goal of cybersecurity risk management is to implement programs that help an organization make more informed decisions regarding risks, threats, and controls.
What Is Cybersecurity Risk Management?
Cybersecurity risk management is the identification and assessment of the impacts or threats to an organization’s digital systems and information. Management also includes prioritization of threats and risks and determination of the appropriate treatment necessary to manage the risks.
Threats to an organization’s systems may include:
- Malware
- Ransomware
- Phishing attacks
- Weak passwords
- Misconfigured cloud services
- Unpatched software
- Insider threats
- Third-party suppliers
- Stolen credentials
- Data breaches
- System outages
Not all threats may be completely prevented.
Risk management identifies which risks cause the most disruption and loss to the organization and determines how to treat them
This integrates cybersecurity into the business and makes strategic decisions about risks.
Why Cybersecurity Risk Management is Important
Limited resources require organizations to make strategic business decisions and focus their resources on areas that provide the greatest business value. A strong cybersecurity risk management program helps organizations:
- Protect sensitive information
- Reduce the likelihood of serious incidents
- Improve business resilience
- Prioritize security investments
- Support regulatory requirements
- Reduce operational disruption
- Improve incident preparation
- Protect customer trust
- Communicate cyber risks to leadership
Understand how to manage risk in order to make informed decisions.
Understanding Cybersecurity Risks
Risk management generally consists of several elements that are related to one another.
Assets
Assets are the things that the organization values and wants to protect. it may include customer information, employee information, payment systems, websites, software, intellectual property, databases, and physical devices. Organizations need to first understand the nature of the things that they have in order to adequately manage the risks related to those things.
Threats
A threat is anything that has the potential to cause harm. There are many threats in the world of cybersecurity including hackers, malware, malicious insiders, credential theft, human error, acts of God, and supply-chain attacks.
Vulnerabilities
A vulnerability is a weakness in a system that can be exploited by a threat. A few vulnerabilities may include using outdated or unpatched software, weak passwords, inadequate user access control, or incorrect configuration of cloud storage.
Impacts
The negative impacts from exposure to a risk may include financial loss, service disruption, loss of data, legal liability, loss of reputation, recovery costs, and/or loss of confidence of customers.
Likelihood
We call an estimate of the probability of occurrence of a risk its likelihood.
Consequently, for many organizations, both the likelihood and potential impact of a risk influence the level of attention given to that risk.
The Cybersecurity Risk Management Process
Many organizations follow a similar process, even if they use different frameworks.
1. Identify Critical Assets
The starting point is understanding what should be protected.
The organization should identify and document its major technology and information systems.
These can include:
- Servers
- Laptops
- Mobile devices
- Cloud environments
- Databases
- Business applications
- Websites
- Customer information
- Administrative accounts
- Third-party services
It is not necessary or desirable to protect all assets.
Specifically, the organization should understand which systems and information are essential for the business and furthermore determine which would be problematic if disclosed or lost.
2. Identify Threats
The next step is to consider potential threats to essential systems and information.
Examples may include intentional attacks, employee error, failure of business processes, and/or failure of suppliers.
Threats may include compromise of payment information, website defacement and other attacks, and theft of customer information.
It is not necessary to identify all possible threats. The focus should be on realistic threats.
3. Identify Vulnerabilities
Finally, the organization should consider weaknesses which increase the likelihood of a successful threat.
Discovering vulnerabilities can happen through:
- Security assessments
- Vulnerability scanning
- Configuration reviews
- Penetration testing
- Software updates
- Access reviews
- Cloud security assessments
- Code reviews
Finding a vulnerability is just part of the overall process.
The business must also determine what weaknesses present material risk to the business.
4. Assess Risk
When considering risk, the question should be “what is the likelihood of this occurring and what is the potential impact if it does occur?”
Risks can be classified as low, medium, high, or critical.
More developed organizations can use something like a 1 to 100 scale or a financial model.
The important thing is that a method is used that is constant and maintains consistency.
5. Prioritize Risks
Not every risk needs to be remediated immediately.
An internal payment application’s testing vulnerability may matter more than a similar vulnerability in an internet-exposed payment application
Effective cybersecurity risk management integrates technical findings with potential business impact.
This allows organizations to prioritize business risks and ensures that they do not spend time addressing low-impact risks while more critical ones remain
6. Choose a Response to the Risk
Controls can help reduce the risk, or the activity creating the risk can be eliminated.
For example, a business decides not to collect extraneous sensitive data.
Transfer The Risk
A component of financial or operational risk may be transferred through contracts, outsourcing, or insurance.
However, risk transfer does not relieve the organization of management responsibility for security.
Accept The Risk
Risk acceptance happens when the cost to reduce the risk is greater than the impact of the risk.
Risk acceptance should occur through conscious business decisions rather than from ignoring the problem.
7. Implement Security Controls
Organizations implement appropriate security controls after making a decision regarding the response
Some examples of security controls are:
- Multi-factor authentication
- Firewalls
- Network segmentation
- Encryption
- Security awareness training
- Endpoint protection
- Secure backups
- Access controls
- Vulnerability management
- Logging and monitoring
- Incident response procedures
- Software patching
Organizations should not treat risks by using popular controls; rather, they should choose controls based on the specific risks being addressed
8. Monitor and Review Risks
Cyber risks change continuously.
Organizational systems and processes evolve, new employees join while others leave, cloud environments change, new vulnerabilities emerge, and new attack vectors become prevalent
Continuous management of security risks is required.
The organization should routinely examine the risk register, security controls, vulnerabilities, incidents, suppliers, and critical assets.
A risk that was previously assessed as low may become high if the systems it affects changes.
What Is a Cybersecurity Risk Assessment?
A cybersecurity risk assessment is a systematic means to identify security risks.
This process usually consists of determining:
- Which assets are important
- Which threats could affect them
- Which vulnerabilities exist
- How likely exploitation may be
- What business impact could result
- Which controls already exist
- Which additional actions may be necessary
All of the above are generally documented on a risk register.
What is a Risk Register?
A risk register is a document that captures details of risks that have been identified.
The details captured may include:
- Risk description
- Affected asset
- Threat
- Vulnerability
- Likelihood
- Impact
- Risk rating
- Existing controls
- Recommended treatment
- Responsible owner
- Review date
A risk register is particularly useful to security teams and business managers to understand key risks in the business.
Some of the best known and used risk management frameworks are NIST, ISO and the British Standards Institution (BSI).
Organizations operate in various contexts and industries, and thus choose different frameworks to best address their needs and priorities.
Cybersecurity Risk Management vs. Cybersecurity
Though they are closely related, risk management and cybersecurity are not the same thing.
Cybersecurity is the process to protect systems, networks and/or information.
Risk management focuses on identifying and prioritizing the most critical security concerns and defining the appropriate response.
Continuing the example above, organizations need a risk management process to determine which of the hundreds of vulnerabilities reported by the security scanner present the greatest threat to their critical systems
Role of Employees in Cyber Risk
It is a misconception to believe that the use of the right technology reduces all organizational risk to an acceptable level.
Every employee interacts with various information systems and carries out multiple activities throughout a work day.
Employees must be the first line of defense for the protection of information and systems, and reporting of potential cyber risks.
Training must be continuous.
Third-Party Cybersecurity Risk
There is a high level of dependence on external providers in most organizations.
Some examples of these providers may include:
- Cloud platforms
- Payment processors
- Software vendors
- Marketing platforms
- Contractors
- IT service providers
- Data-processing partners
A vulnerability in a supplier puts the organization at risk, as well.
Therefore, the management of third party supplier risk is part of cybersecurity risk management.
Organizations should conduct risk management processes before granting a supplier unrestricted access to their systems to determine what the third party is providing, the required level of assurance, and the implemented controls, among other requirements
Common Cybersecurity Risk Management Mistakes
There are gaps in what is achieved and intended by risk management processes.
Treating Cybersecurity as Only an IT Problem
Incidents related to cybersecurity can impact customers, revenues, legal obligations, and how the business operates.
The major cyber risks should be understood by senior leadership.
Focusing Only on Tools
Purchasing more software to address risk is not sufficient.
Before deciding on a control, it is important to determine what the problem is.
Ignoring Third Parties
Subcontractor access can pose a major risk to the organization.
Third parties should be assessed for risks.
Failing to Update Risk Assessments
A risk assessment becomes less useful if it is not reviewed.
Threats and technology can change quickly, and an organization’s profile for risk can also change.
Trying to Eliminate All Risk
It is not practical to eliminate all risks.
The risk should be reduced to an acceptable level.
Best Practices for Managing Cybersecurity Risk
Organizations should align their programs with their core business.
To effectively manage cybersecurity risk, the organization should first understand their core business and how it impacts customers.
The organization should also have a clear ownership for key business risks.
When performing risk and control self-assessments, organizations should maintain consistency in determining the impact and likelihood of risks
The same standard should apply when risks are prioritized.
It is essential for important control and risk decisions to be documented.
Organizations should test important controls, such as backups or incident response procedures.
Organizations should monitor access to systems and assess business-critical systems to ensure they work properly.
Suppliers should also be assessed to determine their risk to the organization.
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Risk registers should be regularly updated to reflect changes in business processes and infrastructure
Management should be informed of the most important risks in clear, understandable language.
Rather than focusing on the volume of existing vulnerabilities, reports to management should highlight which critical systems could fail and for how long.
How Often Should Cyber Risks Be Reviewed?
There is no single review schedule suitable for every organization.
Critical environments may require continuous monitoring, while formal risk assessments may happen periodically.
A new review should also be considered after major changes such as:
- Moving systems to the cloud
- Launching a new application
- Changing important suppliers
- Experiencing a security incident
- Introducing new sensitive information
- Changing network architecture
- Significant organizational growth
Risk management should adapt as the business changes.
Frequently Asked Questions
What is cybersecurity risk management?
This is the process of determining the likelihood and impact of threats and vulnerabilities to an organization’s information systems and evaluating the overall risk to the organization. This process helps decide how best to treat the risk and continuously monitor the environment for changes.
What are the main steps in cybersecurity risk management?
The key steps include identifying and categorizing the organization’s assets, identifying threats and vulnerabilities, evaluating and prioritizing risks, responding to the risks, implementing controls, and continuously monitoring the environment.
What are the four ways to respond to cyber risk?
Generally, an organization may choose to either mitigate, avoid, transfer, or accept the risk.
What is the difference between risk assessment and risk management?
Risk assessment is part of the overall risk management process.
Which cybersecurity framework should a business use?
There are several frameworks, and the most appropriate depends on an organization’s size, industry, and legal requirements.
Can cybersecurity risk be completely eliminated?
Usually not. Organizations instead aim to reduce risk to an acceptable level while continuously monitoring for changes.
Final Thoughts
Separating cybersecurity issues from other business issues is something most businesses are unable to do today.
Threat modeling is useful to prioritize attacks.
Why? Because every defense system has a failure point. Determining the failure point may influence a security investment decision.
Cybersecurity risk management helps to systematically address these questions.
An organization needs to identify and protect its critical assets, evaluate the attacks that are most likely to happen, assess its vulnerability to those attacks, and prioritize the attacks that could most threaten the organization.
It doesn’t have to be difficult.
Most importantly, organizations must systematically document risk decisions, ensure decision-makers understand them, and review them regularly
There will always be new ways to attack a system and thus, there will always be risk.
Constant vigilance by an organization will help lessen the chance of a large-scale attack and will help the organization to better react and adjust its business operations to speedy recover if an attack does occur.
