ISO 27005 standard explained

Key takeaways

• The ISO 27005 framework helps organizations execute an information security risk assessment that aligns with ISO 27001 standards. The international standard is widely applicable and complements other ISO information security guidelines.
• The 27005 standard can help you understand the risk landscape and apply flexible risk management to meet business objectives. It provides a repeatable risk assessment process, makes risk assessment more efficient, and contributes to successful ISO audits.
• Implementing ISO 27005 can be challenging. Organizations must choose controls and identify relevant risks. They must ensure accountability, create communication systems, and obtain executive support.
• ISO 27005:2022 is the latest version of the framework. This version streamlines the assessment process, adds new guidelines on risk scenario planning, and advises organizations to use event-based and asset-based risk approaches.
• Elements of compliant ISO 27005 risk management include context establishment, identifying risks, inventorying assets, evaluating risk criteria, and creating risk treatment plans. Companies must define acceptable risks, communicate risk effectively, and ensure continuous risk management.
  
  

Risk assessment is a core part of creating an ISO-compliant information security management system. ISO 27005 complements ISO 27001, defining risk management processes to control security risks. This article will explain everything you need to know about ISO 27005. Learn about key components, why it matters, and how to apply ISO 27005 risk assessment techniques.

The main purpose of ISO 27005

ISO 27005 aims to improve the risk management process and manage information security risks while enabling ISO 27001 compliance.

Sustainable risk management is part of a secure information security management system (ISMS). Risk assessment analyzes risks to servers, applications, and cloud platforms. Organizations use that knowledge to implement information security controls and protect sensitive data.

Risk management is also integral to the ISO 27001 family of security standards. ISO 27001 and ISO 27002 include 94 information security controls and processes to mitigate information risks. ISO IEC 27005 explains how to take a risk-based approach to choosing controls.

Companies can use implementation guidance in the 27005 standard to design risk assessment processes, document information risks, and create a continuous risk management process.

ISO 27005 benefits for business

Organizations can use internal risk assessment processes and tools. However, there are good reasons to follow ISO 27005 guidance instead of using existing systems.

Benefits of relying on ISO 27005 include:

• Understand the risk landscape. Applying ISO IEC 27005 guidelines eases risk analysis and assessment. Companies can define critical information risks and create appropriate plans to mitigate, transfer, or avoid risks.
• Flexible risk management. ISO 27005 allows companies to create risk environments that suit their business objectives. There is no single route to information security risk management. Companies assess critical risks and implement controls based on their unique operational needs. They can also determine whether to adopt an event- or asset-based risk management process.
• A repeatable process. Risk assessments and treatment plans should follow a similar template to ensure consistent results. ISO 27005 includes a simple four-stage information security risk assessment process. This process cuts the risk of missing critical information risks or applying the wrong classification standard.
• Balance assessment and implementation. The ISO approach to information security risk management saves time and labor. Teams know how much time to spend on assessments and implementation projects, so they are less likely to privilege one over the other.
• ISO 27001 compliance. Following ISO 27005 is a reliable way to meet ISO 27001 requirements. According to ISO guidelines, all controls within an ISMS must be risk-based. ISO 27005 provides a framework to apply risk management and pass ISO certification audits.

Challenges of ISO 27005

Companies using ISO 27005 can encounter challenges along the way. Organizations should understand those issues before starting a risk management project.

Flexibility is a central benefit of ISO 27005. However, it can also bring problems. Companies must choose which controls to use and may lack the technical skills to make this judgment. Organizations must also identify relevant risks. Doing so can challenge smaller organizations with limited cybersecurity experience.

Another issue is that implementing ISO 27005 requires accountability. Companies must establish risk owners, leading to disputes about taking mitigation actions and accepting liability for security failures.

Executives must also be aware of risk acceptance guidelines and should be part of the reporting chain for risk assessment. Ensuring executive buy-in can be problematic in companies where information security risk management is not routine.

Meeting ISO risk assessment standards is also an administrative challenge. Organizations must document every stage in the risk assessment process. Auditors expect paper trails for risk identification, classification, and risk treatment. And they will request evidence of risk communication with all relevant stakeholders.

Finally, ISO/IEC standards require continuous compliance to build a security-focused culture. Companies face challenging ISO 27005 training requirements. Risk monitoring should audit risk treatment plans and controls and integrate emerging threats into risk analysis.

These challenges require consideration and work. However, the benefits of ISO 27001/27005 compliance mean that the positives usually outweigh the negatives.

Differences between ISO 27005:2018 and ISO 27005:2022

ISO 27005 is a dynamic standard, and users should anticipate regular updates. The most recent alteration replaced ISO 27005:2018 with ISO 27005:2022. This new version brought some significant changes that risk assessors should be aware of.

ISO 27005:2022 simplifies the standard. The 2018 version had 12 clauses grouped into six annexes. The 2022 iteration has ten clauses and a single annex. These changes make the newer standard easier to navigate.

Another key difference is that ISO 27005:2022 integrates themes from ISO 27001:2022. Risk assessment guidance now covers advanced threat intelligence and other security techniques absent from earlier iterations.

The 2022 standard also introduced the concept of risk scenarios.

A risk scenario models a situation where an event leads to damaging consequences. For example, a stolen laptop could expose health information. Risk scenario modeling seeks to understand the probability of certain events and their possible impact. The outcomes assist risk management teams when classifying information security risks.

The new standard also introduced two types of risk management approaches: event-based risk identification and asset-based risk identification.

• Event-based assessments look at events and scenarios. They suggest causes and assess impacts within the context of overall business objectives.
• Asset-based identification assesses threats to specific business assets. Assessors determine primary and supporting assets, making connections between assets (such as data flows). And they look at how users or customers interact with those assets.

In practice, compliance teams need to use both an event and asset-based risk management approach. The new ISO 27005 document places them at the center of the information security risk management process.

How does ISO 27005 align with ISO 27001?

ISO 27005 aligns naturally with ISO 27001. The 27005 standard provides risk assessment guidance to meet ISO/IEC 27001 requirements, while ISO 27001 also references ISO 27005.

Clause 6 of ISO 27001 deals with information security risk management. This section of the framework is critically important. Assessing risks is the cornerstone of a successful ISMS. Organizations must follow clauses 6.1.1 (risk planning), 6.1.2 (risk assessment), and 6.1.3 (risk treatment).

ISO IEC 27005 guides organizations when meeting these risk management requirements. By referring to the 27005 standards, organizations can:

• Plan an ISMS featuring continuous risk management.
• Assign responsibilities to manage and mitigate information security risks.
• Implement consistent information security risk assessment procedures as described in the 27005 standard.
• Complete the risk treatment documents required by ISO 27001. Documentation includes a Statement of Applicability and a risk treatment plan.

ISO 27005 processes for risk management

The ISO 27005 standard is flexible and allows room for different risk management approaches. However, compliant risk assessment systems tend to follow a similar process.

Context establishment

The first stage in the risk management process defines the risk analysis environment. At this stage, assessors must establish risk criteria. Questions to answer include:

• How does the organization identify critical information security risks?
• What assets need protection? Creating an asset inventory is advisable.
• Who is responsible for risk identification?
• What impact do risks have on information security, integrity, and availability?
• How does the organization calculate the probability of events occurring and the impact of risks on information assets?
  
  

Organizations should have a consistent method of establishing context. Consistency creates a repeatable foundation for later stages of the process.

Standard risk assessment

Risk analysts must now identify information security risks. They should record risks on a centralized ledger and consider how each risk affects critical assets.

Using an updated asset inventory ensures that assessors consider all assets and can focus on high-value data. The result should be a list of risks for each asset.

The next assessment step is risk estimation. Assessors should determine the probability of each risk, measuring how likely it is to occur. They should also estimate the impact of the risk.

Finally, risk assessment teams should compare impacts and probabilities with risk acceptance criteria. Acceptance criteria define actions for high, medium, or low-risk events. This information allows teams to classify risks and prioritize important information security risk management tasks.

Risk treatment

The next step is creating a risk treatment plan. Under ISO 27005, organizations have four options for each risk:

• Risk avoidance. Companies can remove risks entirely. For example, by deleting sensitive data.
• Risk modification. Applying Annex A security controls to manage risk levels.
• Risk sharing. Sharing risk management responsibilities with third parties. Insurance is the most common example.
• Risk-retention. Acceptance that risk is inevitable and the risk level does not require action.

Risk acceptance guidelines

Before implementing the treatment plan, assessors should consider risk acceptance issues. What risks are allowable from a business perspective? Do mitigation measures conflict with business goals or help to achieve them?

This section's result is a definition of risk tolerance (what risks the organization will accept). This definition requires executive sign-off to complete the risk management process.

Consultation and risk communication

ISO 27005 requires organizations to communicate risk management goals and policies to key stakeholders. Stakeholders include employees, executives, business partners, and customers or users.

Users of information assets must know why risk management matters and why controls are in place. Information sharing also enables smooth decision-making when changing the information security risk management system and brings all decision-makers into the ISO 27001 audit process.

ISO 27005 requires a standard risk communication plan. However, it also demands emergency measures to communicate risks during security incidents. Create policies for both scenarios.

Continuous risk management

ISO 27001/27005 compliance is a continuous process. Companies must monitor risks and review their treatment strategy. Regular risk management audits should assess whether new assets have added risks and whether existing risk values need revision. Teams should assess security alerts and incidents. And they should evaluate the general threat environment.

How to become ISO/IEC 27005 certified

Organizations cannot become ISO 27005 certified. Instead, ISO 27005 compliance enables ISO 27001 certification.

Robust risk assessments, treatment plans, communication, and risk monitoring are all components of a compliant ISMS. It is virtually impossible to pass an ISO/IEC 27001 certification audit without understanding and referring to ISO 27005.

Download the standard and adopt its risk management guidelines. This will help you build more secure information systems and boost your chances of achieving ISO 27001 compliance.

Disclaimer: This article is for informational purposes only and not legal advice. Use it at your own risk and consider consulting a licensed professional for legal matters. Content may not be up-to-date or applicable to your jurisdiction and is subject to change without notice.