Cyber threats are on the rise every single year. Business enterprises make use of computers, cloud technologies, mobile devices, web-based services and apps to carry out day-to-day activities. This is great for technology, but at the same time it increases the potential security risks.
Cyber risk management gives organizations an understanding of these risks and offers tools to mitigate them. However, cyber risk management does not refer solely to defending against hacking. It also includes the protection of organizational data, customer data, systems, networks, applications and other digital assets.
A proper cyber risk management program will help the organization get ready for potential security threats in advance and even lessen the negative impact if such incidents actually occur.
This guide will cover the definition of cyber risk management, its significance, process and actions that organizations should undertake to manage cyber risks.
What Is Cyber Risk Management?
Cyber risk management involves identifying, assessing, mitigating and monitoring various risks that can affect your organization’s IT systems and information.
Simply put, it involves figuring out what may happen and deciding what to do about it.
For instance, let us say that you are storing your customers’ information in a cloud database. If this database has poor security features, then the attackers will get access to your confidential information. It amounts to a cybersecurity risk.
This risk can be reduced through the use of strong passwords, access control, multi-factor authentication, encryption, security monitoring, etc.
Typically, cyber risk management involves a number of activities that are closely related, including:
• Cybersecurity risk assessment
• Risk identification
• Risk assessment
• Risk prioritization
• Cyber risk mitigation
• Security monitoring
• Incident response
• Business continuity planning
• Periodic risk assessments
The objective is not always to eliminate all risks. It is practically impossible to do this and is also very costly. Instead, organizations try to minimize the important risks.
Why is Cyber Risk Management important?
Cyber risks pose threats to many areas in businesses. A cyber attack may lead to losses, theft of data, downtime, legal liabilities, and reputational damage.
Effective cyber risk management can prepare companies for these challenges.
Protects Valuable Information
Valuable information is stored by businesses. It may include customer details, information about employees, finances, passwords, business documentation, intellectual property, etc.
A sound security program will allow protecting valuable information from unauthorized access.
Some essential security measures can be such as encryption, restricted access, backups, identity management.
Decreases Chances of Attacks on Business
Of course, there is no system that can prevent a business from a cyberattack. But a business can make a cyberattack less possible by identifying vulnerabilities and eliminating them.
For instance, vulnerability management can detect outdated software or some security weaknesses before criminal elements use it against a business.
Decreases Financial Losses
There are a lot of expenses connected to a cyber incident. They may include restoration of a system, investigation, legal consultations, customer notifications, etc.
Helps Maintain Business Continuity
If a cyber attack takes place, it could render vital systems unusable.
An instance where the employee will be unable to access the files or any applications is through ransomware. An organization that has a good business continuity plan coupled with good backups will be able to recover faster.
Develops Customer Trust
The customer expects that the organization will have measures in place for safeguarding his/her personal information.
It is very difficult to regain trust in case of a serious data breach. This is why there is need for taking cybersecurity seriously.
What Are the Main Cyber Threats?
Before tackling cyber threats, one should be aware of their existence.
There are various sources of cyber threats. Some of them are due to external attacks; some are due to internal failures within the company.
Malware
This term describes a malicious program aimed at damaging the system, stealing data, and doing various illegal things.
The types of malware are viruses, spyware, trojans, and ransomware.
There are several ways to minimize the risk of malware attack: endpoint security, software updates, email protection, and education of employees.
Phishing
This is a type of cyberattack in which a person is deceived by being asked for credentials, credit card details, or any other sensitive information.
Phishing mail looks like a normal mail from the bank, coworker, client, or any online service.
Employees’ education about security threats can help them identify such emails.
Ransomware
It is a type of malware that locks or encrypts files and demands payment.
Ransomware targets businesses, educational institutions, health care providers, governments, and other companies.
Data Breaches
When sensitive information becomes accessed, exposed or stolen without appropriate authorization, it is considered a data breach.
The causes of a breach may include hacking, stolen credentials, insecure systems, activities of insiders or mistakes of people.
Important data should be secured by using access control, encryption, monitoring and other security policies.
Weak Passwords
If weak or reused passwords are used, an account becomes more vulnerable.
Companies should promote strong passwords and use multi-factor authentication (MFA) in case of critical accounts.
In such way MFA ensures that additional step in order to get access to an account becomes required even after obtaining a password.
Insider Threats
All cyber security issues are not originated from external sources.
An insider threat may mean an intentional or unintentional security issue created by an employee, contractor or other authorized individual.
What Is a Cybersecurity Risk Assessment?
Cybersecurity risk assessment refers to a systematic approach for identifying security risks within the business environment.
The process is aimed at helping organizations to find answers to such questions:
• What digital assets do we have?
• What potential threats can we face?
• Are there any existing vulnerabilities?
• What is the probability of an incident?
• What are the consequences of the incident?
• What are the priorities for the identified risks?
Cybersecurity risk assessment provides businesses with the better understanding of their security situation.
Step 1: Identifying Critical Assets
The first step in this process implies identifying what exactly needs to be protected.
Critical assets may include:
• Computers
• Servers
• Databases
• Websites
• Cloud applications
• Client data
• Employees’ information
• Financial information
• Networks
• Mobile devices
• Business applications
It is called asset management.
The organization cannot secure something that it does not even know about.
Step 2: Threat Identification
Upon asset identification, the organization considers possible threats.
These may consist of:
• Cyber criminals
• Malware
• Phishing
• Ransomware
• Insider threat
• Compromised credentials
• Software vulnerabilities
• Denial of service attacks
• Supply chain attacks
Being aware of the threats will help the security team understand where possible threats lie.
Step 3: Vulnerability Identification
Vulnerability is a weakness that can be exploited.
As an example, there can be a vulnerable application containing security flaws.
Other examples of vulnerabilities may involve weak passwords, poor access control, vulnerable devices, misconfigurations of cloud systems, and lack of security patches.
There are various techniques for vulnerability identification and analysis, including vulnerability scans and security testing.
Step 4: Risk Assessment
Every single risk has different levels of importance.
Likelihood and impact should be taken into account in risk assessment.
As an example, if there is a risk involving exposure of thousands of customer records, it should receive more attention than some small-scale risk.
Businesses may consider risk scoring in order to assess risks.
There is a formula for assessing the risk level:
Risk = Likelihood × Impact
The formula may differ among organizations.
Step 5: Risk Prioritization
Once risks have been analyzed, they can then be categorized as low, medium, high, or critical, among others.
Risks that need high priority should normally be attended to first.
This allows organizations to manage their security budget, personnel, and time efficiently.
What Is Cyber Risk Mitigation?
Cyber Risk Mitigation refers to actions taken to lessen the likelihood or severity of a cyber risk.
After assessing the risk, an organization must determine how to manage it.
There are a number of ways to manage a risk.
Risk Reduction
Risk reduction involves implementing measures that will lessen the likelihood and impact of a threat.
For instance, multi-factor authentication, good password management, and logging can mitigate account takeover risk for an organization.
Risk Avoidance
Risk avoidance refers to halting activities that lead to unacceptable risk.
For example, an organization can avoid using an application that fails to meet their security standards.
Risk Transfer
Certain risks can be shifted to other parties.
An example is cyber insurance. It may help cover some of the expenses incurred from qualifying cyber risk.
But insurance alone is not a replacement for security measures.
Accepting Risk
There are instances where an organization might choose to accept a risk.
This will normally happen where the cost of rectifying the risk exceeds the potential consequences, or where the risk is low.
Accepting risk must be a conscious business decision rather than an outcome of overlooking the problem.
What Is Cybersecurity Risk Management Framework?
A Cybersecurity Risk Management Framework is an effective way of identifying, assessing, managing, and monitoring the cybersecurity risks.
Using existing frameworks, an organization can develop a more consistent security strategy.
One of the well-known cybersecurity risk management frameworks is the NIST Cybersecurity Framework (CSF).
It helps to provide guidelines for managing cybersecurity risks and organizing the security activities.
Using a cybersecurity risk management framework helps to relate technical security controls to overall business objectives.
Typical steps performed using a framework include:
1. Identifying critical assets and risks
2. Protection of systems and information
3. Detection of any suspicious activity
4. Response to any security incidents
5. Incident recovery
6. Continuous improvement of security
All the above-mentioned steps may vary depending on the organization’s size, industry, technology, and level of risk.
Cyber Risk Management Key Components
Cyber risk management is not only about the installation of antivirus software.
It consists of multiple security and business processes.
Risk Identification
An organization has to understand its assets, possible threats, vulnerabilities, and business impact.
Risk Analysis
The security team has to analyze the likelihood of a risk and its potential damage.
Security Controls
Security controls can be used by an organization to mitigate risks.
Security controls can consist of different kinds of controls (technical, administrative and physical).
Continuous Monitoring
Cybersecurity risks evolve in time.
There are always new vulnerabilities and threats, and there are also system changes because businesses implement new applications, devices and services in the cloud.
The process of continuous security monitoring helps businesses react on those changes faster.
Incident Response
The good incident response plan describes the action of an organization during a security incident.
It can describe responsibilities, communication methods, investigation, containment and recovery.
Recovery
Organizations have to recover from a security incident.
It can involve such processes as secure backups, disaster recovery and business continuity planning.
Cyber Risk Management and Business Strategy
The issue of cybersecurity cannot be approached as an IT-only problem.
IT risks may impact sales, operations, finances, customer service, compliance with the law, and the company’s reputation as a whole.
Management should be aware of the key cyber threats and provide the security specialists with all needed resources.
For instance, when a company implements a new service in its online strategy, it should think about security from the very start of planning the process.
Such an approach is named security by design.
Here security measures are taken into account at the beginning, not at the end of product development.
Role of Employees in Cybersecurity
Employees are key players when it comes to cybersecurity.
Even highly sophisticated technologies may suffer because of human error.
A human can make a mistake like clicking on a phishing link, passing sensitive information to someone who should not have it, or using an insecure device.
Security training for employees is aimed at making them aware of some possible threats.
It should include such topics as:
• Phishing
• Passwords
• Multi-factor authentication (MFA)
• Safe browsing
• Data security
• Device security
• Social engineering
• Breach reporting
Employees should know how to report a security breach.
Timely reporting is very important in limiting its possible consequences.
The Role of Cybersecurity Policies
Policies serve the purpose of making employees aware of their responsibilities.
Some of the necessary policies could include:
• Passwords
• Acceptable use of technology
• Telecommuting
• Mobile devices
• Data protection
• Access control
• Incident reporting
• Vendor security
• Cloud computing
• Business continuity
These policies must be reviewed from time to time.
Moreover, they should be easily understandable by employees.
Role of Artificial Intelligence in Cyber Risk Management
Artificial intelligence is gaining prominence in the field of cybersecurity.
With the help of AI-based security solutions, security personnel are able to analyze large volumes of data and identify any anomalies.
Artificial intelligence could help with:
• Threat detection
• Security monitoring
• Log analysis
• Malware detection
• Phishing detection
• Risk analysis
• Automation of alerts
But at the same time, there are some risks related to the use of AI.
It could be used by hackers for creating more believable phishing messages, automating attacks and finding vulnerabilities.
A Simple Checklist for Cyber Risk Management
The following checklist could be used by businesses as an initial step towards effective cyber risk management:
• Assess digital assets.
• Locate sensitive data.
• Conduct a Cybersecurity Risk Assessment.
• Assess vulnerabilities in the system.
• Conclude which risks have high impact.
• Applying security controls where needed.
• Implement MFA.
• Install software updates.
• Implement strong access controls.
• Employee training.
• Systems & account monitoring.
• Protecting critical backups.
• Evaluate third-party vendors.
• Test incident response plans.
• Test disaster recovery plans.
• Analyze cybersecurity metrics.
• Review risks on a regular basis.
Conclusion
Management of cyber risk is a crucial element of contemporary business security.
There is no organization using digital technology which would not be exposed to any cyber risk. Irrespective of the company size, there is still a certain risk.
Identification of assets, sensitive data, potential threats and vulnerabilities is the first step.
Periodical Cybersecurity Risk Assessment will help in determining the current state of the business security. Once risks are identified, Cyber Risk Mitigation techniques can be applied in order to minimize the probability and the consequences of security incidents.
Also, Cybersecurity Risk Management Framework can be useful for organizing the work of the business in terms of security and aligning the efforts on cybersecurity with business objectives.
Cybersecurity cannot be created by any single measure or technique. It requires multiple layers of security, monitoring, awareness of employees, secured technology, access controls, backups, testing and improvements.
The changes in technologies will lead to the changes in cyber risks. Therefore, constant risk assessment and improvement of the security measures will ensure the safety of the company in future.