6 Most Effective Risk Management Techniques

Cyber risk management techniques help businesses to identify and address cyber risks, create baselines for acceptable risks, and prepare for unexpected threats. Thorough risk identification, risk assessment, risk analysis, and risk control also help to improve enterprise-wide communication, collaboration, and decision-making.

A robust cyber risk management process benefits every function, including sales, marketing, procurement, project management, and accounting.

This post discusses some effective cyber risk management strategies to help you safeguard your business and ensure its longevity and competitiveness.

How to Identify, Analyze and Prioritize Cyber Risks

Cyber risk management starts with risk identification, analysis, and prioritization. It’s essential to identify risks early and to document and communicate all identified risks to relevant stakeholders.

1. Risk Identification Techniques

   Decision Tree Diagram

   A decision tree diagram helps project teams and enterprise risk managers to assess the potential outcome of each decision and then choose the best option to minimize risk.

   SWOT Analysis

   A SWOT analysis helps you get insights into the potential risks of a new project or business process.

   Fishbone Diagram

   A fishbone is also known as a “cause and effect diagram.” It is an effective tool to identify the root causes of a particular problem and factors influencing specific effects.

   Other cyber/business risk identification techniques include:

   • Brainstorming
   • Risk surveys
   • Root cause and checklist analyses
   • Assumption analyses
   • Event inventories
   • Loss data

2. Risk Analysis and Prioritization

   To analyze identified risks, you need to start by understanding whether the risk is qualitative or quantitative. This will help you determine which risks pose the greatest potential harm and then to prioritize your mitigation strategies accordingly.

   Analyze qualitative risks based on probability of occurrence, possible impact, and urgency. To develop effective action plans and guide decision-making, categorize such risks by common root causes.

   To analyze quantitative risks, measure possible outcomes and evaluate the probability of achieving desired objectives.

   You may also find your organization is exposed to risks from vendors, agents, contractors, and services providers. Third-party risk management is a valuable way to strengthen trust and streamline processes while protecting your business.

   To analyze and prioritize risks, you can use any of these tools:

   • Risk probability and impact matrix: Rate and prioritize potential risks based on probability and impact.
   • Pareto chart: Identify risks based on the cumulative impact.
   • Fault tree analysis: Identify the probabilities of various possible outcomes from given faults.

6 Effective Cyber Risk Management Techniques

Here are some effective risk management techniques to control enterprise cyber risk.

1. Inventory All Digital Assets

   Every organization functioning in the digital economy is vulnerable to cyber-attacks. Some organizations and assets, however, are more susceptible than others. So take stock of all your digital assets (IT systems, devices, software applications, databases, and so forth) that might be vulnerable to:

   • Malware and ransomware
   • Viruses, botnets, and Trojans
   • Phishing
   • Password theft
   • Denial of service attacks
   • Zero-day exploits
   • SQL injections
   • Other cyber risks

   Creating this list will help to clarify your most significant risks, so you can take appropriate action to eliminate or at least minimize them.

2. Identify Past and Future Risks

   Perform an historical analysis of past cyber risks. How did they affect your organization? How did you address them? Then investigate any future risks that could affect the assets you identified earlier. Check each possible threat and the critical risks associated with each. Add all these risks into your risk management plan.

3. Identify Direct and Indirect Results of a Risk

   A futures wheel diagram is an effective way to identify every potential risk’s direct and indirect results. Brainstorm with relevant stakeholders to chart out this diagram.

   Make sure you review all possible consequences (positive and negative) of the risk, as well as subsequent repercussions. Also, discuss and document possible actions to control, mitigate, or eliminate negative consequences.

4. Conduct Risk Audits

   If your organization already has a risk response plan in place, that’s great. You still need to examine and document the effectiveness of existing risk responses and controls on a regular basis. Such an audit will reveal any gaps to be addressed to shore up your risk management program.

5. Design a Risk Action Plan

   If a risk does come to fruition, how will your organization respond?

   Based on 2021 statistics, the average cost of a data breach is $4 million. You can keep this cost down by identifying appropriate risk response strategies. There are four main strategies:

   • Risk avoidance: Avoiding risk means you seek to eliminate all uncertainties.
   • Risk transfer: Pass risk liability to a third party, such as by purchasing a cyber insurance policy.
   • Risk mitigation: Reduce the risk probability below a certain acceptable threshold.
   • Risk acceptance: Accept risks and devise strategies to control and monitor them.

   Identifying the right approach for each risk can help your IT or project team respond quickly to a realized risk, and keep mitigation and remediation costs to a minimum.

6. Prepare a Contingency Plan

   For cyber risk management and mitigation, it’s vital to prepare a contingency plan. A process decision program chart (PDPC) can help.

   To start, create a tree diagram of the process with all relevant objectives and activities. Identify possible problems for each element, as well as countermeasures or preventive actions.

   Not all actions may be feasible, so focus on the ones that are.

ZenGRC: The Key to Effective Cyber Risk Management

The risk management techniques highlighted in this post can all help you identify, analyze, monitor, and control your organization’s cyber risks.

If all of this sounds overwhelming, Reciprocity’s ZenGRC platform can be a valuable addition to your cyber risk management program. This single platform provides advanced visibility across the organization so that you can take the next step towards risk evaluation, risk management, and continuous risk monitoring.

ZenGRC is an effective way to stay ahead of evolving security risks and minimize business exposure. For more information about ZenGRC or our other risk management solutions, contact an authorized ZenGRC representative or click here for a free demo.