In the age of digital business, protecting your organization’s digital assets from cyber threats and reducing your cyber risk exposure has never been more important – or more complicated. At the same time, most organizations are also required to comply with numerous industry and government regulations that dictate standards for data privacy and IT security.
To manage cybersecurity threats and to meet regulatory compliance obligations, your organization will need a cyber risk management program that can fulfill both objectives.
Many organizations, however, just don’t know where to begin.
Fortunately, several frameworks exist that can provide guidance. Indeed, many widely used frameworks today were first developed simply as a collection of best practices to help organizations navigate the often complicated risk management process. Those best practices were then organized and codified into frameworks that can help with both security risk and compliance risk.
Some of the most common compliance frameworks include PCI DSS, which protects customers’ card payment details; COSO’s internal control framework, which safeguards financial information; and HIPAA, which protects patients’ healthcare data.
Even if your organization doesn’t need to meet compliance standards, you can still use these frameworks to assess the maturity of your risk management program against industry best practices and standards.
It’s also important to note that being in regulatory compliance does not always mean that you are secure. On its own, compliance is not enough to protect organizations from potentially devastating cybersecurity risks. Instead, you need a holistic, risk-based approach that makes room for all types of risk, compliance included.
In this article we’ll take a closer look at the cyber risk management process and how it can help define your risk posture. Then we’ll discuss some of the ways in which risk posture and compliance can come together to create a more holistic risk management program centered around security. Equipped with this information, your organization will be better positioned to protect itself on the path toward worry-free risk management.
What Is Risk Posture?
Risk posture refers to the status of your overall cybersecurity program. It includes the overall management and strategy related to protecting your organization’s software and hardware, network services, and information from cyber risks.
Why Is Risk Posture Important?
Defining your organization’s risk posture helps executives to understand the threats to achieving your business objectives. That understanding can then sharpen the decisions your organization makes about how to allocate resources so that the organization is protected from the risks with the highest probability and impact.
Although often confused with security posture, risk posture is different.
Risk Posture vs. Security Posture
Security posture refers to the overall status of your cybersecurity readiness. It encompasses information security, data security, network security, penetration testing, security awareness training, vendor risk management, vulnerability management, data breach prevention and other security controls.
While your organization’s cybersecurity posture is made up of the strategies that are designed to protect against security threats, your risk posture has more to do with the approach you take to manage the risks associated with those threats. Both security posture and risk posture often have an inverse relationship with cybersecurity risk: as those postures improve, cyber risk will decrease.
Security posture and risk posture are both derived from the risk assessment process. A risk assessment will help your organization more fully understand what assets it has, how valuable they are, and the infrastructure in place to protect them.
Later in this article we’ll talk more extensively about risk assessments and how they can help your organization become more secure. First, we need to take a closer look at risk posture and some of the other risk-related factors that influence it.
What Factors Influence Risk Posture?
Risk Appetite
Risk appetite is the amount of risk that your organization is willing to take to achieve its objectives. Ideally your organization will seek to reduce risks and minimize their potential harm wherever possible, but all businesses will need to accept at least some risks to drive positive performance. The amount of risk you’re willing to accept in pursuit of business goals is risk appetite.
Your risk appetite will be unique to your organization, but it can be informed by some of the regulatory requirements we mentioned above. For the most successful risk appetite, your organization will need to adopt a single risk measurement and risk scoring methodology, plus a common risk language that can be applied consistently and understood throughout your entire organization.
Risk Tolerance
Risk tolerance is the range of performance you’re willing to accept in pursuit of specific business goals. More formally, one could define risk tolerance as “acceptable variation from a performance goal.” (That is how COSO defines risk tolerance in its enterprise risk management framework.)
Types of risks you should consider include financial risk, operational risk, credit risk, third-party risk, information security risk, compliance risk, and legal risk. So if risk tolerance measures how much loss you’re willing to accept for specific goals, then you might ask: “How much risk of a breach via a third-party are we willing to accept? Should we spend more money controlling our third parties tightly, or save money and trust that their security self-assessments are valid?”
Together, your organization’s risk appetite and risk tolerance define your risk posture, or your overarching approach to risk management. A strong risk posture will help your organization take more meaningful risks within the constraints of your strategic and operating objectives.
Compliance
The average cost of a data breach reached new heights at $4.24 million in 2021, and the top reason for even higher costs was that the breach included a compliance failure as well. Indeed, organizations that suffered high-level compliance failures that resulted in fines, penalties, and lawsuits experienced an average cost of $5.6 million per breach.
As we mentioned above, compliance alone is not enough to inform the entirety of your risk management program, and therefore your risk posture. It is, however, an important factor that you must consider when planning your organization’s overall cybersecurity.
How Does Compliance Influence Risk Posture?
If your organization complies with all necessary frameworks, it is inevitably more secure than it might otherwise be – but that comfort will only go so far. Compliance risk is still only one security risk among many, and all the others can threaten your risk posture as well.
The trap here is that while compliance should be the top concern for IT security and risk management, too many organizations leave it as the only concern. They take a compliance-driven, check-the-box mentality to cybersecurity: “We’re in compliance with all rules, so we needn’t do anything more.”
That’s wrong. A compliance-driven approach can be useful to achieve point-in-time compliance certifications, but it can often impede a more continuous approach to measuring risk posture in real-time.
At the end of the day, a more holistic approach to risk management will be one that is informed by the compliance requirements set forth by governing bodies, but not limited to those requirements. Ultimately, to gain insight into the strength of your organization’s risk posture, you’ll need to go beyond assessing compliance and take threats, vulnerabilities and risks into account throughout the risk management process.
How to Strengthen Risk Posture
Without a strong risk posture, you inevitably expose your organization to a number of risks that might be otherwise avoidable. The modern attack surface is massive, which makes the task of bringing it into focus all the more important. For the strongest risk posture, we recommend the following best practices.
Examine Existing Frameworks
While the entirety of your risk management program should not be informed by compliance alone, it’s still an important factor to consider. Whether compliance is a requirement or not, most organizations begin their journey toward better risk management by examining some of the existing compliance frameworks to inform their own policies and procedures.
Whether it’s PCI DSS, HIPAA, NIST, COSO, ISO or any other compliance framework, simply using an existing standard as the basis for your own risk management program can go a long way toward more robust and well-defined processes.
Compliance frameworks not only provide a number of risk management methodologies. They also help you more clearly define the terms and metrics you’ll use to manage risk across your entire organization.
To determine whether your organization is meeting those requirements, you’ll need to conduct an audit. An internal audit can help you prepare for an external audit by a governing body so that you’re not surprised by the results – but an audit can also help you determine whether your risk management program is working properly.
Practice Thorough Risk Management
You can create all the policies and procedures you want using any number of compliance frameworks as a starting point. Until you actually put these practices into place, however, they probably won’t do much good.
To set yourself up for success, start by creating a list of all your assets. While it might sound self-explanatory, organizations often struggle to define what they’re actually trying to protect. Typically this list will include your systems, applications, devices, data, business processes, and users.
Next, you’ll need to conduct a risk assessment to identify and prioritize the risks to those assets. A thorough risk assessment also involves a certain degree of vulnerability management. In practice, this means monitoring your assets for vulnerabilities including the likelihood of an attack and the harm it might cause.
Once you’ve completed a risk assessment, you’ll need to document the results. This includes making note of existing security controls (such as firewalls) that currently reduce risk to your assets, as well as mitigation strategies for any risks without controls. A thorough risk assessment will help you determine your risk appetite and your risk tolerance, and will ultimately inform both your risk posture and your security posture.
After you’ve collected all this information, you need to turn it into actionable content for the decision-makers who will ultimately decide what to do about risks. This is where the management portion of risk management is most important; all the information you derive from the risk assessment process is meaningless unless it can be applied to your organization in a tangible way.
Regularly Audit and Continuously Monitor
As mentioned above, auditing your organization to make sure that it’s meeting compliance requirements can go a long way toward a more holistic approach to risk management. But a single audit at a certain point in time isn’t enough to determine whether your organization is secure or not.
Ultimately, your organization will need to continuously monitor its compliance posture, risk posture, and attack surface to protect itself from the ever-evolving threat landscape. This means finding ways to stay informed in real-time about any and all of the threats, vulnerabilities, and risks that your organization faces on a daily basis.
If this sounds overwhelming, you’re not alone. Fortunately, there are automation solutions that can help.
Manage Compliance and Improve Risk Posture with the Reciprocity ROAR Platform
It can be difficult to see the connections between compliance and risk posture, especially if your organization is using spreadsheets to perform the majority of its risk management processes. Simply keeping everyone on the same page can be tricky, not to mention the issues that can arise with ever-changing compliance requirements.
If your organization is struggling with its risk management, the right tools and compliance software can make all the difference.
The Reciprocity ROAR Platform, which underpins Reciprocity ZenRisk and Reciprocity ZenComply, gives you the power to be more strategic with IT risk management by putting your business activities front and center. Discover a modern way to manage your risk posture with the Reciprocity ROAR Platform, giving you the ability to understand and act on your IT and cyber risks, all in a single unified platform.
With an incredibly intuitive user experience paired with in-application expert guidance, you can assess, manage, and communicate risks and their potential business impact. Using AI, the relationships between assets, controls and risks are automatically created, alerting you to changes in your risk posture and making it simple to grow and manage your risk programs.
With dashboards and reports that provide contextual insights, it’s easier to communicate with key stakeholders and make informed business decisions with the Reciprocity ROAR platform.
Become more strategic with your IT risk management and talk to an expert today to learn more about how the Reciprocity Product Suite can help your organization confidently manage risks and compliance.