Mastering Cyber Risk Management: Safeguarding Your Business Against Evolving Digital Threats

Cyber Risk Management: Protecting Your Business in a Digital World

Cyber risk management, also called cybersecurity risk management, is the process of identifying, prioritizing, managing, and monitoring risks to information systems. It has become a vital part of broader enterprise risk management efforts, as cyber threats are constantly evolving. The most effective way to protect your organization against cyber attacks is to adopt a risk-based approach to cyber security. A risk-based approach ensures that the cyber security measures you implement are based on your organization’s unique risk profile. You’ll save time, effort and money by avoiding addressing unlikely or irrelevant threats. Department S can help you develop a cyber security risk management strategy, enabling you to take a systematic approach to managing your security challenges.  The first part of the cyber security risk management process is a cyber risk assessment. This risk assessment will provide a snapshot of the threats that might compromise your organization’s cyber security and how severe they are.  Based on your organisation’s risk appetite, your cyber risk management programme then determines how to prioritize and respond to those risks. Cybersecurity risk management is the strategic process of finding, analyzing, prioritizing and addressing cybersecurity threats. It ensures that the most significant threats are handled swiftly by addressing them based on their potential impact.

Companies across industries depend on information technology to carry out key business functions today. This reliance exposes them to a range of threats, including cybercriminals, employee mistakes, natural disasters, and other cybersecurity issues. These threats can cripple critical systems or wreak havoc in other ways, leading to lost revenue, stolen data, long-term reputation damage, and regulatory fines.  While these risks cannot be eliminated, cyber risk management programs can help reduce their impact and likelihood. Companies use the cybersecurity risk management process to pinpoint their most critical threats. They then select the right IT security measures to protect information systems from cyberattacks and other digital and physical threats. This selection process is based on their business priorities, IT infrastructures, and resource levels. Cybersecurity risk management is the process of identifying an organization’s digital assets, reviewing existing security measures, and implementing solutions to either continue what works or to mitigate security risks that may pose threats to a business. This type of ongoing vulnerability management (VRM) is crucial as the organization and the external threat landscape evolves. 

By implementing a robust cyber risk management program, organizations can:

• Identify vulnerabilities: Proactively discover weaknesses in their systems before attackers can exploit them.
• Prioritize threats: Determine which risks pose the greatest danger to their operations and data.
• Minimize damage: Reduce the impact of successful attacks by having response plans in place.
• Maintain compliance: Adhere to industry regulations and standards related to data security.

Investing in cyber risk management is no longer optional in today’s interconnected world. It is a crucial step in ensuring business continuity and safeguarding valuable assets.   Cybersecurity risk management is the strategic process of finding, analyzing, prioritizing and addressing cybersecurity threats. It ensures that the most significant threats are handled swiftly by addressing them based on their potential impact.  Cyberattacks do not happen at random. Security experts know where to look to find signs of an impending attack. Some of the most common marketers are:

• Mentions of the company on the dark web
• Confidential data, like user account credentials, for sale
• Similar domain name registration for phishing attacks.

While many organizations perform an initial cybersecurity risk assessment, they don’t create an ongoing review process and practice. It can lull companies into a false sense of security as the environment and risks change.

Continuous risk management

Continuous risk management is integral to ensure ongoing security. It requires administrators to stay abreast of the latest attack methods for each network device. They must then update their protection to combat new hacking or attack tactics.  It requires the cooperation of every user in an organization to maintain the network’s security. Everyone needs to own full ownership and responsibility for security risks. The days of siloed departments working in parallel with each other are over. Instead, effective risk management requires a unified, disciplined, coordinated, and consistent solution. Some of the most critical risk management action components include:

• Implementing strong policies and solutions to assess vendor risk
• Finding internal weaknesses, such as outdated software
• Identifying new risks, such as new regulatory processes
• Reducing IT threats through new policies, training programs or internal controls
• Testing security posture
• Documenting vendor risk management

 

The Challenges of Cyber Risk Evaluation

It’s difficult to evaluate cyber risk with total certainty. Companies rarely have full visibility into cybercriminals’ tactics, their own network vulnerabilities, or more unpredictable risks like severe weather or employee negligence. Plus, the same kinds of cyberattacks can have different consequences for different companies. For example, data breaches in the healthcare sector cost USD 10.10 million on average, whereas breaches in hospitality cost USD 2.9 million, according to the IBM Cost of a Data Breach report.  For these reasons, authorities like the National Institute of Standards and Technology (NIST) suggest approaching cyber risk management as an ongoing, iterative process rather than a one-time event. Regularly revisiting the process allows a company to incorporate new information and respond to new developments in the broader threat landscape and its own IT systems.

To ensure that risk decisions account for the priorities and experiences of the whole organization, a mix of stakeholders typically handles the process.  Cyber risk management teams may include:

• Directors
• Executive leaders like the CEO and chief information security officer
• IT and security team members
• Legal and HR
• Representatives from other business units

Companies can use many cyber risk management methodologies. While these methods differ slightly, they all follow a similar set of core steps. These core steps typically include:

• Identify: Determine the systems, assets, data, and resources that need protection.
• Protect: Implement safeguards to limit or mitigate potential cyberattacks.
• Detect: Develop methods for identifying cybersecurity events when they occur.
• Respond: Create and execute a plan to contain the impact of a cybersecurity incident.
• Recover: Restore any capabilities or services that were impaired by an attack.

Cyberattacks are not random. If you know where to look, there are usually signs of a planned attack against an organization. Telltale markers of an imminent attack include mentions of the organization on the dark web, the registration of similar domain names to be used for phishing attacks, and confidential information – such as user account credentials – put up for sale.  Many organizations don’t maintain an ongoing vulnerability management (VM) program of their cybersecurity risk after they conduct a Cybersecurity Maturity Assessment and take initial steps to bolster security.

 

The Core Steps of Cyber Risk Management

1. Risk Framing (The Scope of Assessment)

Risk framing is the act of defining the context in which risk decisions are made. By framing risk at the outset, companies can align their risk management strategies with their overall business strategies. This alignment helps avoid ineffective and expensive mistakes, like deploying controls that interfere with key business functions.  To frame risk, companies define elements such as:

• Scope: What systems and assets will be examined? What kinds of threats will be considered? What timeline is being used (e.g., risks in the next six months, the next year, etc.)?
• Asset Inventory and Prioritization: What data, devices, software, and other assets are in the network? Which of these assets are most critical to the organization?
• Organizational Resources and Priorities: What IT systems and business processes are most important? What resources (financial and otherwise) will the company commit to cyber risk management?
• Legal and Regulatory Requirements: What laws, standards, or other mandates must the company comply with?

These and other considerations provide the company with general guidelines when making risk decisions. They also help the company define its risk tolerance—that is, the kinds of risks it can accept and those it cannot.   While you could assess your entire organization, that is typically too big of an undertaking for one assessment. Usually, it is best to start with a specific location, business unit, or business aspect. For example, a single web application or payment processing are aspects to assess.

 

2. Risk Assessment

Companies use cybersecurity risk assessments to identify threats and vulnerabilities, estimate their potential impacts, and prioritize the most critical risks. How a company conducts a risk assessment will depend on the priorities, scope, and risk tolerance defined in the framing step. Most assessments evaluate the following:

• Threats: These are people and events that could disrupt an IT system, steal data, or otherwise compromise information security. Threats include intentional cyberattacks (like ransomware or phishing), employee mistakes (like storing confidential information in unsecured databases), and natural disasters like earthquakes and hurricanes.
• Vulnerabilities: These are flaws or weaknesses in a system, process, or asset that threats can exploit. Vulnerabilities can be technical, such as a misconfigured firewall or an operating system bug. They can also arise from weak policies and processes, like lax access controls.
• Impacts: This refers to the potential consequences of a threat. A cyberthreat could disrupt critical services, leading to downtime and lost revenue. Hackers could steal or destroy sensitive data, or scammers could trick employees into sending them money. The impacts of a threat can also extend beyond the organization, affecting customers or partners.

Because it can be challenging to quantify the exact impact of a cybersecurity threat, companies often use qualitative data like historical trends and information about attacks on other organizations to estimate impact. Asset criticality is also a factor: the more critical an asset is, the more costly attacks against it will be.   When performing a risk assessment, all stakeholders within the scope must provide full support. Their input is vital for:

1. Pinpointing the most critical processes and assets.
2. Finding risks.
3. Assessing each risk’s impact.
4. Deciding your organization’s acceptable level of risk tolerance.

It requires everyone to understand risk assessment terminology (like impact and likelihood) so that everyone is on the same page when it comes to framing risk. Crucially, you must level-set and know that there will always be risks and it’s impossible to address them all, whether from a technical or resource perspective.  Once the scope and common understanding are completed, it is time to find the risks to your organization:

Determining assets

You can only protect the assets you know, so a complete inventory of logical and physical assets for the scope of your assessment is required. This means more than just the critical business assets and probable targets. It needs to include any asset attackers might want to control as a pivot point, such as:

• A picture archive
• Communication systems
• Active Directory server

Use your asset inventory list to build a network architecture diagram to envision the communication paths and interconnectivity between processes and assets. A diagram can also help you identify network entry points to make identifying threats faster.

Finding threats

Threats are any techniques, tactics or methods used to harm your organization’s assets. Threat libraries and resources can help you find new and potential threats to your assets. Government agencies such as NITTF Resource Library stay current on the latest threats by pooling information from its community.

Pinpointing consequences

The order and how your respond to threats should depend on…

• The severity of the risk
• The severity of what can go wrong

Specify what the consequences are of an identified threat if bad actors exploit the vulnerability. For example, are there regulatory fines, could customers’ data be stolen, or will it damage your reputation?  Summarize the consequences in simple scenarios so that each stakeholder understands the risks related to business objectives. It helps your security team decide on appropriate measures to counteract the threat.

Quantifying cyber risks for better risk management decisions

Identifying relevant risks is just the start. You might know your organization faces a high risk of ransomware and a successful attack will cost you a lot. But are you able to tell precisely how likely an attack is and how much it will cost? This is what quantifying risks helps you with. Beyond informing more effective cyber risk decisions, it can also help make a strong case for cyber investment in the most vulnerable areas to your company board.

So how can you go about quantifying risk? By bringing together refined statistical approaches and cyber threat modelling, it is possible to tell how likely an attacker is to succeed at every stage of an attack path. This analysis can further help you identify and prioritize defences that offer best bang-for-buck risk reduction, rather than wasting time, effort, and money on low-contributing controls. Such a threat-driven approach can help you spend where you need to and maximize protection, leaving more resources for the organization to achieve core business objectives.

To keep up with a complex risk landscape, you also need to know how your cyber capabilities will hold up against likely threats – readily and in an accessible format. Our approach delivers on this with the ability to simulate cyber-attack scenarios and define how likely they are to unfold. The idea is to integrate industry-proven approaches, including attack path modelling for likelihood quantification and Monte Carlo simulations for financial impact and cost-benefit modelling, in a user-friendly web app.

With quantification techniques, you will still need to make tough risk management decisions, but you will be equipped with far better information to make them.   Risk measures how likely a potential threat is to affect an organization and how much damage it would cause. Likely threats with the potential for significant damage are the riskiest, while unlikely threats that would cause minor damage are the least risky.  During risk analysis, companies consider multiple factors to assess how likely a threat is. These factors include existing security controls, the nature of IT vulnerabilities, the types of data a company holds, and even the company’s industry. For example, organizations in the manufacturing and finance sectors often face more cyberattacks than those in transportation and telecommunications.

Risk assessments can draw on internal data sources, like security information and event management (SIEM) systems, and external threat intelligence. They may also consider threats and vulnerabilities in the company’s supply chain, as attacks on vendors can significantly impact the company.  By weighing all these factors, the company can build its risk profile, a catalog of its potential risks, prioritized based on their criticality level.

 

3. Responding to Risk

IT risk, according to Gartner, is “the potential for an unplanned, negative business outcome involving the failure or misuse of IT.” What is the likelihood of a threat exploiting your vulnerability, and how severe would it be? After identifying risks, it’s critical to analyze them in this spotlight, determine how likely the risks you identified will actually happen and the impact they would have on your organization.

Determine the risk based on the likelihood that cybercriminals can discover, exploit and reproduce the threat or vulnerability over historical occurrences. Impact is the level of harm it would cause your organization if the vulnerability is exploited. The impact should include integrity, confidentiality and availability in each scenario.  Because this part of the assessment is subjective, getting input from stakeholders and security experts is critical to ensure it is accurate. Use the highest impact in your final score:

• Rank likelihood on a scale of 1 (rare) to 5 (very likely).
• Rank impact on a scale of 1 (very severe) to 5 (negligible).

The company uses the risk assessment results to determine how it will respond to potential risks. Organizations may choose to accept risks deemed highly unlikely or those with low potential impact, as investing in security measures may be more expensive than the risk itself. However, likely risks and those with higher potential impacts will usually be addressed. Possible risk responses include:

• Risk Mitigation: This involves using security controls to make it harder to exploit a vulnerability or to minimize the impact of exploitation. Examples include firewalls, intrusion detection systems, and incident response plans.  Specific measures can impact and reduce the risk level to an acceptable level. Assign an appropriate team responsible for employing measures to lower high risks.
• Risk Remediation: This means fully addressing a vulnerability so it cannot be exploited. Examples include patching software bugs, updating systems, or retiring a vulnerable asset.
• Risk Transfer or Avoid: If mitigation and remediation are not practical, a company may transfer responsibility for the risk to another party. The most common way to do this is by purchasing a cyber insurance policy. Determine if the risk is much higher than the benefits. If it does, you may decide to discontinue a given activity to eliminate any threat.

It’s impossible to eliminate all risks. There will always be residual risk that needs to be accepted by stakeholders for your cybersecurity strategy.

 

4. Risk Monitoring and Review

The organization monitors its new security controls to verify that they are working as intended and satisfy relevant regulatory requirements. Additionally, the organization monitors the broader threat landscape and its own IT ecosystem. Changes in either—the emergence of new threats or the addition of new IT assets—can create new vulnerabilities or make previously effective controls obsolete. By maintaining constant surveillance, the company can adapt its cybersecurity program and risk management strategy in near real-time.

Documenting all risks in a risk register is critical. Because risk management is ongoing, it should be reviewed regularly to stay current on all cybersecurity risks. Some things to include in your risk register include:

• Risks scenarios
• Date risk was identified
• Any current security controls
• Mitigation plan
• Current risk level
• Status of progress
• Residual risk
• Risk owner

 

The Cyber Security Risk Management Process

Although specific methodologies vary, a risk management programme typically follows these steps:

• Identify the risks that might compromise your cyber security. This usually involves identifying cyber security vulnerabilities in your system and the threats that might exploit them.
• Analyse the severity of each risk by assessing how likely it is to occur and how significant the impact might be if it does.
• Evaluate how each risk fits within your risk appetite (your predetermined level of acceptable risk).
• Prioritise the risks.
• Decide how to respond to each risk. There are generally four options:
• Treat – modify the risk’s likelihood and/or impact typically by implementing security controls.
• Tolerate – make an active decision to retain the risk (e.g., it falls within the established risk acceptance criteria).
• Terminate – avoid the risk entirely by ending or completely changing the activity causing the risk.
• Transfer – share the risk with another party, usually by outsourcing or taking out insurance.
• Since cyber risk management is a continual process, monitor your risks to ensure they are still acceptable, review your controls to ensure they are still fit for purpose, and make changes as required. Remember that your risks continually change as the cyber threat landscape evolves, and your systems and activities change.

 

Standards and frameworks that mandate a cyber risk management approach

ISO 27001 

ISO/IEC 27001:2013 – the international standard for information security management. Clause 6.1.2 of ISO 27001 states that an information security risk assessment must:

• Establish and maintain information security risk criteria;
• Ensure that repeated risk assessments produce “consistent, valid and comparable results”;
• identify risks associated with the loss of confidentiality, integrity and availability of information within the scope of the information security management system;
• Identify the owners of those risks; and
• Analyse and evaluate information security risks according to the criteria established earlier.

 

Why Cyber Risk Management Matters

As companies increasingly rely on technology for everything from day-to-day operations to business-critical processes, their IT systems have become larger and more complex. The explosion of cloud services, the rise of remote work, and the growing reliance on third-party IT service providers have brought more people, devices, and software into the average company’s network. As an IT system grows, its attack surface expands. Cyber risk management initiatives offer companies a way to map and manage these shifting attack surfaces, improving their overall security posture.

The broader threat landscape also evolves constantly. Every month, roughly 2,000 new vulnerabilities are added to the NIST National Vulnerability Database. Thousands of new malware variants are detected monthly—and that’s only one type of cyberthreat.  Closing every vulnerability and countering every threat would be unrealistic and financially impossible. Cyber risk management offers companies a more practical way of managing risk by focusing information security efforts on the threats and vulnerabilities most likely to impact them. This targeted approach prevents companies from applying expensive controls to low-value and non-critical assets.

Beyond prioritizing security efforts, cyber risk management also plays a crucial role in regulatory compliance. Organizations can use cyber risk management initiatives to comply with regulations like the General Data Protection Regulation (GDPR).  For example, under GDPR, companies must implement appropriate technical and organizational measures to protect personal data. Cyber risk management helps identify and implement those measures. During the cyber risk management process, companies consider these standards when designing their security programs. Reports and data generated during the monitoring stage can help companies prove they performed due diligence during audits and post-breach investigations.  In some cases, companies may be required to follow specific risk management frameworks.

 

Situational Awareness in Cybersecurity

Cybersecurity risk management is important because it helps a business assess its current cybersecurity risk profile. This informs the decisions the security organization will make to reduce risk and address vulnerabilities.  Cybersecurity risk management also fosters situational awareness within a security organization. Simply put, analysts don’t know what they don’t know. Awareness is the ability to look at all the available information, recognize what’s important, and act accordingly.  Organizations must clearly understand current and future risks. You can assess awareness according to three distinct levels:

• Situational awareness: An organization understands the critical elements—people, data, and processes—and the operational elements for executing its information security strategy.
• Situational ignorance: Organizations assume everything is okay without considering the impact of people, data, and processes. They may be implementing security controls and awareness training, but there is no straightforward process or strategy that alignswith risk reduction and mitigation. In this scenario, budgets continue to creep upward.
• Situational arrogance: Organizations continue to spend big while being routinely compromised and breached. They may actually consider people, data, and processes but fail to act because of other budgetary priorities. In this scenario, it may only be a matter of time before a business’s reputation is severely damaged due to a continuous inability to defend against attacks.

Cybersecurity risk management encompasses various security risk mitigation strategies. Implementing a strategy to assess, identify, mitigate, and remediate vulnerabilities and risks is critical to every security organization operating at any level in any sector.  By implementing a robust cyber risk management program, organizations can achieve a high level of situational awareness, enabling them to make informed decisions, prioritize resources effectively, and proactively address vulnerabilities before they are exploited.

You might find it helpful to explore more about the concept of cyber risk and how it interacts with various elements of information security. Speaking of that, understanding risk monitoring can be crucial for businesses aiming to keep their data secure. Additionally, keeping abreast of the tactics and techniques used by cybercriminals is essential for crafting robust defence strategies. Finally, knowing how to develop an effective risk response plan can significantly enhance your organisation’s resilience against evolving digital threats. These resources will enrich your understanding of cyber risk management and support your efforts in safeguarding your business.