Cybersecurity risk assessment in 5 steps

Cyber security risk assessment in 5 steps

Are you worried about the safety of your digital business? With so many cyber threats out there, it's crucial to have a plan in place to protect your operations and data. In this guide, we'll introduce you to cybersecurity risk assessments and show you how to carry out one for your organization to ensure the best possible network protection.

Cybersecurity risks are a growing concern for businesses of all sizes. In this blog post, we'll explore what cybersecurity risk assessments are and why they're important for keeping your business safe. We'll also walk you through the process of carrying out a risk assessment so you can be confident in your security measures.

Key takeaways

  • Cybersecurity risk assessments are crucial for businesses to understand, control, and mitigate cyber risks, forming a critical component of risk management and data protection efforts.

  • A security risk assessment is a dynamic document that assesses an organization’s ability to guard data and IT technology against relevant digital threats, prioritizing core assets and providing guidance on how to mitigate risks.

  • The two most common cyber security risk assessment frameworks are the NIST Cybersecurity Framework and ISO 27001:2013, providing high-quality assessment exercises.

  • Performing a cybersecurity risk assessment can ensure complete regulatory compliance, keep stakeholders informed and engaged on cybersecurity issues, and encourage regular updating and sourcing of modern security tools.

  • The cybersecurity risk assessment process involves setting parameters, creating an asset inventory, carrying out asset-by-asset risk analysis, assessing threat probability, creating a risk register and establishing controls, and creating a risk assessment report to communicate findings at the executive level.

Cybersecurity risks definition

Risk is present wherever we invest money and resources. Generally speaking, we can calculate risk as the probability of something happening multiplied by the severity of its effects. That has specific implications in the world of information systems and cybersecurity.

Anything that compromises IT operations or data protection counts as a cybersecurity risk. Well-known cyber security risks often involve malicious threats like malware infections or data breaches. However, they also involve external threats like natural disasters or equipment malfunction.

Assessment teams generally calculate these risks for each asset individually, considering business objectives. A cybersecurity risk assessment is the route to understanding and managing those risks.

Why do you need to perform a cyber security risk assessment?

Cyber threats can have a significant financial impact on businesses. Data breaches cost US companies an average of $4.35 million per incident, while ransomware recoveries cost an average of $2 million. These costs are often too high for small businesses, making risk assessment crucial.

A cybersecurity risk assessment helps document, evaluate, and neutralize threats to core IT assets. It is a frontline defense against security incidents and forms the foundation for ongoing threat prevention strategies. A company can build institutional knowledge about potential dangers and ensure regulatory compliance by conducting a risk assessment.

Additionally, risk assessments keep stakeholders informed and engaged on cybersecurity issues, helping them make appropriate decisions about funding and staffing security teams. They also encourage regular updates and the use of modern security tools.

What is a cybersecurity risk assessment?

A cybersecurity risk assessment is a dynamic document that assesses and analyzes an organization’s ability to guard data and IT technology against every relevant cyber threat. This document is not necessarily exhaustive. Instead, it prioritizes core assets and threats, providing information and guidance about mitigating the risks they face.

IT teams present the documents produced during cyber security risk assessments to executive-level decision makers, who decide how to allot resources and meet the report’s recommendations.

Companies must conduct cyber risk assessments to protect against malicious threats and data loss and have various options. Some organizations have sufficient resources and skills to execute an in-house risk assessment. Others bring in third-party expertise for repeated risk assessments for initial and follow-up assessments.

Common cybersecurity risk assessment frameworks

The increasing importance of cybersecurity to the global economy has led to several standardized cyber risk assessment formats. The two most common are the NIST Cybersecurity Framework and ISO 27001:2013. Both can form the basis for high-quality assessment exercises.

NIST cybersecurity framework

The National Institute for Standards and Technology (NIST) is a federal body that advises both government agencies and private companies, providing high-level guidance on cybersecurity.

NIST’s Risk Management Framework Framework includes a set of guidelines to follow when assessing cyber-risks. The NIST website hosts a database of approved security controls alongside step-by-step procedures to cover basic risk assessment. This assessment includes building blocks like threat detection, risk identification, protective measures, threat response, and data recovery.

ISO 27001:2013

Devised by the International Organization for Standardization (ISO), ISO 27001 provides the elements required to build an effective information security management system. It acts as a tool to audit compliance with ISO 27000—which is ISO's list of best-in-class cyber threat mitigation measures.

ISO 27001 requires an assessment of internal corporate assets but also considers third-party vendor information security risks—an increasingly important risk assessment feature as hybrid cloud assets proliferate.

The security risk assessment process involves establishing a risk management process to identify vulnerabilities, followed by analysis, prioritization, mitigation of risks, and reporting. This information is a dynamic part of a broader information security risk management system. Reports produced are intended to act as “living documents”—subject to constant revision as new information arises.

Specialist risk assessment frameworks

In addition to NIST and ISO standards, companies may wish to consult specialist risk assessment formats for relevant sectors. For instance, health companies may need to build HIPAA compliance into their risk strategies, while credit data handlers must factor in PCI-DSS risks.

GDPR compliance entails specific data protection measures and will affect companies active in the European Union. FERPA applies to companies handling student records, while organizations liaising with the Department of Defense must be CMMC compliant.

How to perform a cybersecurity risk assessment in 5 steps

Conducting a cybersecurity risk assessment is crucial for organizations to identify and mitigate potential threats to their critical assets. By following these five steps, you can ensure a comprehensive and effective security risk assessment process.

Step 1: Set risk assessment parameters and create an asset inventory

The first step in order to identify cyber threats is to decide the limits of the exercise. Instead of enterprise-level assessments, divide the process into manageable units such as branches or departments.

Create an inventory of all assets to be evaluated and protected, including data sources, servers, and sensitive assets that could be used to compromise data. Establish an information value for each asset and evaluate information security risks, including financial value, legal standing, and business significance.

With that information, assessment teams can divide information assets into critical, major, and minor categories.

Step 2: Conduct cybersecurity risk assessments

The next step in the cybersecurity risk management process is to assess the risk level each critical asset faces from threats and vulnerabilities. Threats include attack vectors like ransomware, malware, and data theft via man-in-the-middle attacks. Vulnerabilities are network weaknesses that allow threats to compromise assets.

For each asset, identify the relevant threats and vulnerabilities and evaluate their potential impact. Consider all types of threats, including cyber attacks, operational downtime, insider threats, and human error. Ensure that every threat is linked to the relevant asset, and evaluate physical and technical security risks.

For example, a man-in-the-middle cyber attack on remote laptops could exploit an unpatched firewall or VPN software, resulting in a data breach and loss of customer information. Assess the likelihood and potential impact of such an attack, as well as other relevant threats, to determine the overall risk level for each asset in your cybersecurity risk management plan.

Step 3: Assess threat probability

During the cyber threat assessment process, the identified risks are evaluated based on their likelihood of occurrence and potential impact. The cybersecurity risk assessment evaluates the severity of threats by considering the asset's information value.

Use a scale of 1 to 5 to rank the likelihood and impact of each threat, with 5 being the most critical. Use the formula Risk = the likelihood of threats materializing x the severity of their impact to calculate metrics for threat probability and impact.

This data can be used to prioritize cybersecurity threats and establish relevant controls. It is also recommended to record findings in a risk matrix to tackle complex risk assessments, including a third-party risk. The risk matrix features likelihood on the x-axis and severity on the y-axis, instantly showing which assets to prioritize.

Step 4: Create a risk register and establish controls

After conducting risk assessments and identifying potential risks to key assets, compile risk assessment reports that detail the consequences of attacks, mitigation measures, and the cost of creating security controls. Prioritize each asset based on risk likelihood and severity, and decide on appropriate countermeasures such as discontinuation, mitigation, transferral, or acceptance.

  • Discontinuation involves completely ending a specific activity or asset usage because the risks faced are so urgent

  • Mitigation includes using security controls such as antivirus software, multi-factor authentication, staff anti-phishing training, and cloud tools like SASE security that can be costly, but the expenses are often outweighed by the potential cost of inaction when risk and asset information levels are high

  • Transferral involves shifting risk through specialist cyber insurance or working with third-party partners

  • Acceptance should be used in cases where risks are simply part of everyday operations, and the register should highlight any residual risks for approval by executives

The reports should also highlight any residual risks for approval by executives. This information will help make informed decisions about safeguarding physical and logical assets and ensuring business operations continuity. Use these reports to guide future assessments and continuously identify and prioritize risks.

Every asset should now have a risk rating based on threat severity and probability. There should be clear mitigation actions to counter every risk, along with an assessment of costs. All of this information feeds into the final stage of the process.

Step 5: Create a risk assessment report and communicate the findings at the executive level

A cybersecurity risk assessment policy is useless if the findings remain in the hands of security teams. Create an informative report summary that informs executives about the risk assessment process, the risk model being used, and the basis for recommendations. Argue for investment in cybersecurity and allow key stakeholders to sign off on the final document.

The complete risk-handling process assessment becomes a living document as part of your security policies, with the full backing of company managers. Directing the document at the executive level ensures that risk assessors constantly keep core business objectives in mind.

Partner with NordLayer for your cyber risk assessment needs 

Whatever sector you work in, there is a cyber threat out there waiting to disrupt and potentially destroy your business. Data breaches occur constantly, exposing poor risk strategies and inflicting massive losses.

The solution is simple: making risk assessment and mitigation core parts of business culture.

NordLayer offers a range of products geared towards risk mitigation. Our SASE packages lock down cloud-based networks. IAM tools make remote working and vendor security much simpler, while Zero Trust controls allow companies to contain threats as they emerge.

Secure critical assets and meet compliance requirements with the help of our expert team. Get in touch and find an easy route to comprehensive risk management.

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