Cybersecurity risk assessment in 5 steps

Cyber security risk assessment in 5 steps

Today’s globally networked businesses face multiple threats, placing their operations and data in danger. Cybersecurity risk assessments help organizations understand, control, and mitigate every type of cyber threat. They form a critical component of risk management and data protection efforts, and every business must have a cyber-risk strategy in place.

This blog will look at what constitutes a cybersecurity risk and how to conduct cybersecurity risk assessments that provide best-in-class protection.

What are cybersecurity risks?

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 cybersecurity.

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

Assessment teams generally calculate these risks on an asset-by-asset basis regarding core business goals. And the route to understanding and managing those risks is known as a cybersecurity risk assessment.

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 how to mitigate the risks they face.

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

Companies must carry out 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 both the initial assessment and follow-ups.

The major types of 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

NIST (the National Institute for Standards and Technology) 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 security – an increasingly important risk assessment feature as hybrid cloud assets proliferate.

The process runs from establishing a risk management process through risk identification and analysis, prioritization, mitigating risks, and reporting. This information is meant to serve as dynamic parts of a broader information security 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.

Why do you need to perform a cybersecurity risk assessment?

The argument for cyber risk assessments is simple: the cost of potential cybersecurity incidents is too high to justify inaction. Data breaches cost US companies on average $4.35 million per incident. Ransomware recoveries cost an average of $2 million. These are costs that small businesses cannot afford, which is why risk assessment is all-important.

The most crucial role of risk assessments is documenting, assessing, and neutralizing threats to core IT assets. A good risk assessment offers frontline defense to prevent security incidents. It acts as a foundation for ongoing threat prevention strategies, informing a company’s security posture and building institutional knowledge about potential dangers.

There are other benefits of carrying out high-quality cyber risk assessments. For instance, risk assessments can ensure complete regulatory compliance. They keep stakeholders informed and engaged on cybersecurity issues, ensuring they make appropriate decisions about how to fund and staff security teams. And they also encourage regular updating and sourcing of the most modern security tools.

Who should perform a cyber risk assessment?

Risk assessments should ideally be carried out by a specific risk assessment team, including IT security experts and input from executives. But the process also needs feedback from every department, with designated leaders providing information about asset values and potential impacts.

If companies cannot resource a complete assessment team, third-party partners are available to carry out enterprise-wide assessments, compile documentation, and manage risks subsequently.

What is the difference between risk management and risk assessment in cybersecurity?

Risk assessment procedures investigate assets and the cyber threats that they face. This process generates an inventory of potential threats across the whole enterprise and forms the basis for risk management.

Risk management entails the analysis of risk assessments and their translation into concrete mitigation measures. Experts must analyze every threat or vulnerability according to asset value and potential impacts before recommending mitigation measures for each risk as required.

The risk management process results in a risk register providing an overview of priority risks and how to handle them. It also generates a report to inform executive-level decisions as managers incorporate cyber risk assessment into the company’s overall security posture.

How to perform a Cybersecurity risk assessment in 5 steps

Here are some of our tips.

1. Set risk assessment parameters and create an asset inventory

The first stage in assessing cyber risk is deciding the limits of the exercise. Enterprise-level assessments may be too broad to deliver effective coverage. Instead, divide the process into manageable units, such as branches or departments.

Next, create a picture of the overall risk environment by compiling an inventory of the assets to be assessed and protected.

This inventory includes all data sources and servers, especially those housing sensitive data. But there are other critical assets to bring under the assessment umbrella. For instance, Active Directory servers or internal communications systems could be hijacked by hackers and used to extract valuable data. The exercise must include anything that attackers can use to compromise critical data.

It’s also a good idea to create a network architecture diagram using your asset inventory as its basis. This diagram will represent the connections between assets, outlining how attackers could exploit network entry points.

Establish an information value for each asset. This number includes financial asset value, legal standing, and business significance. It acts as a metric when prioritizing risk levels later in the process. When estimating information value, take into account:

  • The value of information assets to competitors

  • The financial and legal cost of losing information assets

  • Reputational damage resulting from losing this information

  • The cost of recreating information assets should they be lost

  • How critical assets are to day-to-day operations

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

2. Carry out asset-by-asset risk analysis

The next step in the risk assessment process is to look at each critical asset and establish the levels of risk they face from threats and vulnerabilities.

Threats include attack vectors like ransomware, malware, trojans, or data theft via man-in-the-middle attacks. Vulnerabilities are network weaknesses that allow threats to compromise assets.

Run through major threats for each asset on a case-by-case basis. For example, the threat could be a man-in-the-middle cyber attack on remote working laptops (the asset), exploiting an unpatched firewall or VPN software (the vulnerability).

For each asset, threat, and vulnerability, add an assessment of the likely consequences of attacks. In the example above, that could include the loss of customer information via a data breach. Repeat the process for each asset until you have a comprehensive list of the threats your network faces.

Don’t limit yourself to cyber attack threats. Cyber threat analysis should also include the risk of operational downtime due to malfunction or natural disasters, alongside data loss risks due to insider threats and human error.

Every relevant threat must be linked to the assets under consideration, so take into account both physical security and technical security.

3. Assess threat probability

The next stage moves from listing identified risks to assessing how likely threats are to materialize and the damage they could cause.

Rank every threat on a scale from 1 (extremely rare) to 5 (highly likely) and impacts on a similar scale ranging from negligible to critical. At this point, bring into play the asset information values established earlier. If assets have high information value, this will increase the severity rating of threat impacts.

The core equation to consider when evaluating risk is:

  • Risk = the likelihood of threats materializing x the severity of their impact.

This calculation will give you metrics for threat probability and impact. This data can be used in the next step – assigning priority to all security risks and establishing relevant controls.

At this stage, it’s also a good idea to record findings in a risk matrix that features likelihood on the x-axis and severity on the y-axis. Consulting this matrix instantly shows which assets to prioritize.

4. Create a risk register and establish controls

After compiling a thorough risk matrix for every critical asset, you will now be in a position to compile a comprehensive risk register.

This document includes information about critical assets, key risks they face, the consequences of attacks, mitigation measures, and the cost of creating security controls. It also details who owns every risk – and time frames for safeguarding assets from cyber-threats.

Prioritize each asset from low to high. At low priority levels, assets are not critical, and establishing controls is not urgent. At the medium level, relatively quick action is required to guard important assets. Security controls are urgently required at the highest level to protect high-priority assets.

Now, decide what mitigation actions to take. For each risk, this could include:

  • Discontinuation – Completely ending a specific activity or asset usage because the risks faced are so urgent.

  • Mitigation – Using security controls such as antivirus software, multi-factor authentication, staff anti-phishing training, and cloud tools like SASE security. Security controls entail costs, but the sums often outweigh the cost of inaction when risk and asset information levels are high.

  • Transferral – Shifting risk through specialist cyber insurance or working with third-party partners.

  • Acceptance – In some cases, risks are simply part of everyday operations. The register should highlight any residual risks for approval by executives.

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.

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. That’s why an informative report summary must also be part of every risk management strategy.

This report summary informs executives about the risk assessment process, the risk model being used, and the basis for recommendations. It argues for investment in cybersecurity and allows key stakeholders to sign off on the final document.

When sign-off is complete, the risk assessment becomes a living document as part of your security policies, with the full backing of company managers. At the same time, directing the document at the executive level ensures that risk assessors constantly keep core business objectives in mind.

Work with NordLayer to reduce cyber-risk exposure

Whatever sector you work in, a cyber threat is waiting to disrupt and potentially destroy your business. Data breaches constantly occur, 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 simplify remote working and vendor security, 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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