What Is a Cyber Risk Assessment and Why Have One Done?

The National Institute for Standards and Technology (NIST) describes a cyber risk assessment as a risk assessment that is "used to classify, measure, and prioritize risk to organizational processes, organizational assets, entities, other organizations, and the Nation as a result of the activity and use of the information systems."

A cyber risk assessment's primary aim is to help educate decision-makers and facilitate effective responses to the risks. They also have an executive overview to assist managers and directors in making educated safety decisions. The method of risk evaluation of information security risks the addressing of the following questions:

• What are the critical assets of information technology at our organization?
• How can a data breach majorly affect our business, be it due to malware, cyber attack or human error? Think about customer info.
• What are the specific risks and sources of danger to our organization?
• Which are the flaws, internally and externally?
• What is the effect if we exploit those vulnerabilities?
• What are the odds of exploitation?
• Which cyber attacks, cyber threats or security incidents could affect the business's ability to function?
• Which level of risk is comfortable taking for my organization?

When you can answer those questions, you can find out what to cover. That means you can develop risk-reduction IT security measures and data protection strategies. However, you need to answer the following questions before you can do that:

• Which chance am I lowering?
• Was this the most significant risk to health priority?
• Is this the most cost-effective way of reducing the risk?

It will help you understand the information importance of the data you seek to protect and allow you to better understand the process of managing the information risk in terms of safeguarding business needs..

Why Perform a Cyber Risk Assessment?

There are several reasons you want to conduct a cyber risk assessment and a couple of reasons you need to do so. Let's talk them through:

Long-term cost reduction: Detecting possible risks and weaknesses and then working to minimize them has the ability to avoid or eliminate security incidents that can save the company money and/or long-term reputational harm.

Providing an information security risk assessment framework for future evaluations: Information risk assessments are not one of the procedures. You need to monitor them regularly. Having a successful first turn guarantees repeatable processes even with staff turnover.

Good organizational knowledge: Understanding organizational flaws gives you a good understanding of where you need to strengthen your organization.

Avoid data breaches: Data breaches can affect any company financially and reputationally.

Bypass compliance issues: Consumer data that is compromised because HIPAA, PCI DSS or APRA CPS 234 have not been complied with.

Avoid interruption of application: In-house or customer service systems must be available and operate for staff and consumers to do their jobs.

Loss of data: Theft of trade secrets, code or other essential information assets may result in you losing your company to competitors.

Therefore, cyber risk assessments are central to knowledge risk management and every company's broader risk management policy.

Who Will Do a Cyber Risk Assessment?

Your company preferably has in-house staff that can handle it. This means providing IT workers with an understanding of how the digital and network infrastructure operates, as well as managers who understand how information flows and any specialized operational expertise that could be useful during evaluation. In addition, organizational accountability is essential to comprehensively evaluate cyber risk.

Small companies may not have the right people in-house to do a thorough job, so they may need to outsource a third-party evaluation. Organizations often turn to cybersecurity tools to track their score for cybersecurity, avoid attacks, submit security questionnaires and reduce risk to third parties.

When to Do a Cyber Risk Assessment?

Over the following sections, we will start with a high-level overview and drill down into each stage of when to do a cyber risk assessment.

First, you need to understand what data you have, what resources you have, and the importance of the data you are trying to protect before you do something to start evaluating and minimizing the risk. To answer the following questions, you may want to start by auditing your data:

• Which data are we collecting?
• Why and where do we store the data?
• How do we secure the data and log it?
• How long are we to hold the data?
• Which does have access to the data internally and externally?
• Is the place where we store the data protected properly? 

You would then want to specify the evaluation parameters. To start, here are a few good first questions:

• Which is the intention of that evaluation?
• What is the nature of the valuation?
• Are there any goals or limitations that could influence the evaluation?
• To whom do I need to provide access to all the information I need in the organization?
• Which type of risk model does the company use to assess risk?

A couple of these are self-explanatory questions. What you really want to know is what you will be evaluating, who has the experience to adequately analyze, and whether there are any regulatory guidelines or budget limitations.

Now let's look at what steps to take to complete a comprehensive cyber risk assessment. In turn, these will provide you with a blueprint for risk assessment.

Stage 1: Assess and Determine Information Value

Most companies don't have an infinite knowledge risk management budget. So, it's best to restrict the focus to the most crucial business properties.

To save time and money later, spend some time setting a norm to decide what an asset is important for. For example, many companies have financial value, legal status, and market significance. Then, when the standard is officially integrated into the information risk management strategy of the company, use it to identify each asset as important, significant, or minor.

There are other questions you can ask about interest determination:

• Are there any financial or legal penalties for disclosing or destroying this information?
• How valuable to a competitor is that information?
• Can the knowledge be recreated from scratch? How long would it take, and what the associated costs would be?
• Will the loss of that knowledge impact sales or profitability?
• Will this data loss impact day-to-day business operations? Without that, will our workers work?
• What would be the reputational harm leaked from that data?

Stage 2: Asset Identification and Prioritization

The first step is to identify assets for evaluating and deciding the scope of the assessment. This helps you to determine what properties to analyze. For example, you do not want to analyze each house, employee, electronic record, business secret, car, and office equipment item. Know that not all properties are equal in value!

To build a list of all essential properties, you need to collaborate with company users and the management. 

Stage 3: Threat Identification

Any vulnerability that could be exploited to breach security, cause harm, or steal the organization's data is a threat. Although hackers, malware, and other risks to IT security are bearing in mind, there are several other threats:

Natural disasters: Floods, hurricanes, earthquakes, lightning and fire. Not only do you lose data but also servers. Consider the risk of natural disasters when choosing between on-premise and cloud computing servers.

Device failure: Do the most important systems run on high-quality equipment? Will they have a good backup?

Human error: Are your S3 buckets correctly designed to contain confidential information? Is the organization's knowledge of malware, phishing and social manipulation appropriate? Anyone can accidentally click on a connection to malware or enter their credentials in a phishing scam. Therefore, robust IT security controls are required, including daily data backups, password managers, etc.

Adverse threats: Third-party vendors, rivals, trusted rivals, protected insiders, collectives of hackers, ad hoc parties, corporate hacking, manufacturers, nation-states.

Some common threats impacting each organization include:

Unauthorized access: From both attackers and malware to employee mistakes.

Misuse of data by authorized users: Usually, an insider threat when data is changed, removed or used without authorization.

Data leaks: Personally identifiable information (PII) and other confidential data through attackers or by weak cloud service configuration.

Data failure: Failure or unintended deletion of the data as part of bad backup or replication.

Disruption of service: Loss of income or reputational harm arising from downtime.

After you recognize your organization's threats, you will need to determine their effects.

Stage 4: Address Vulnerabilities

Now it is time to switch from what "might" happen to what has the potential to occur. A vulnerability is a weakness that an attacker could exploit to breach security, damage the organization, or steal sensitive information. 

Vulnerabilities are detected by vulnerability analysis, audit reports, vulnerability database at NIST, vendor data, incident response teams, and security analysis of software.

With proper patch management, you can reduce organizational software-based vulnerabilities via automatic, forced updates. But don't ignore the physical limitations. For example, having keycard access decreases the risk of anyone gaining access to an organization's operating system.

Stage 5: Analyze and Implement New Controls

Analyze measures in place to reduce or remove the risk of a threat or vulnerability. Controls may be enforced by technological means such as hardware or software, encryption, intrusion detection systems, two-factor authentication, automatic updates, continuous monitoring of data leakage or through non-technical means such as security protocols and physical controls such as locks or access to keycards.

Tests should be graded as preventive or detective tests. Preventative controls aim to avoid attacks such as encryption, antivirus or continuous security monitoring. Detective controls seek to figure out when an attack happens, including continuous detection of access to the data.

Step 6: Measure the Probability and Effect of Different Scenarios Yearly

Now you know the importance of information, threats, vulnerabilities and controls. The next step is to assess how likely these cyber risks will occur and their effect if they occur. It's not only that you could be facing one of these incidents at some stage, but what opportunity it might be for success. You can then use these inputs to decide how much to spend on minimizing each of the cyber risks you found.

Imagine creating a database that holds all the most confidential details about your business and that you price the details at USD100 million in line with your assumptions.

You assume at least half of your data will be exposed in case of a breach before it can be contained. This leads to an additional USD50 million loss. But you expect this to happen rarely, say one incident in fifty years. The result is an estimated USD50 million loss every 50 years or USD1 million annually.

Arguably explaining the reduction of a USD1 million budget per year.

Stage 7: Prioritize Risk Based on Mitigation Costs vs The Importance of Information

Using risk level as a guideline to assess risk reduction measures for senior management or other responsible individuals. Here are a few general directives:

• Strong: to implement corrective steps as soon as possible.
• Medium: proper steps established within a reasonable time period.
• Small: decide whether to accept or minimize the risk.

Remember, you've now calculated the asset's worth and how much you can invest in securing it. 

The next move is simple. If it costs more than it is worth to protect the asset, it does not make sense to use a preventive measure to protect it. That said, note that not just financial impact may have a reputational effect, so it's also essential to factor that in as part of the cyber risk assessment.

Stage 8: Record Findings From Study on Cyber Risk Assessment

The final step is producing a risk evaluation report to assist management in budget, strategy and operational decision-making. The report will describe the risk, vulnerabilities and benefits of each hazard, along with guidelines for effects and probability of occurrence and control.

As you work through this process, you can understand your company's resources, what is your most important data and how you can run and protect your business better. You can then develop a risk management strategy that determines

• What the company needs to do daily to track its security posture, 
• How threats are handled and mitigated, and 
• How the following risk assessment process should be carried out.

If you are a small business or multinational firm, information risk management is at the heart of cybersecurity. Such systems help develop rules and guidelines that answer what risks and vulnerabilities might be causing financial and reputational harm to the company and how you can mitigate them.

Ideally, your cybersecurity score will increase as your security implementations progress, and you respond to the quality of your current evaluation.