Risk is inherent to all businesses, regardless of your industry — and to prevent those risks from causing harm, you must first know what threats you are facing. The foundation of any successful risk management program is a thorough risk assessment, which can take many forms depending on what methodology best suits your needs.
Risk assessment is the process of determining what threats confront your organization, the potential severity of each threat, and how to keep the likelihood of damage as low as possible. A risk assessment will usually include the following steps:
- Identify the risks
- Determine their likelihood and any potential losses
- Create controls and mitigation measures
- Record, review, and monitor
On their own, these basic steps aren’t enough to help a company develop a clear view of its threat landscape. That’s where risk assessment methodologies come in. A methodology is a disciplined approach to working through those basic steps, so your assessment can happen more efficiently and arrive at better results.
Keep in mind that you are not limited to one choice of methodology. Some assessments may call for a combination of approaches; or different methods may be better suited to different departments within your organization.
Types of Risk Assessment Methodologies
While all risk assessments seek to achieve similar goals, the ways that they pursue those goals can look very different. The structure and framework of your risk assessment process can be tailored to the individual environment and circumstances that make up your company’s risk landscape.
Qualitative Versus Quantitative
Most assessments can be designed as either qualitative or quantitative, depending on what kind of information you hope to gather about the risks affecting your company.
Qualitative risk assessments are more common, and rely on experience from staff and the designated assessor to create accurate risk models. A qualitative risk analysis might involve presenting your team with your list of potential risks and asking how these threats might disrupt their day-to-day procedures. You might end up labeling risks on a low-medium-high scale, and describing potential damage as low, moderate, or severe.
Quantitative risk assessments depend more on numbers and concrete data. A quantitative approach will attach financial values to both your company’s assets and your list of risks. An assessor can then model the potential cost of each risk. This kind of cost-benefit analysis can be especially useful for communicating your risk management program to board members or investors.
Both qualitative and quantitative assessments have their place. Either strategy can be used with a variety of risk assessment methods:
Generic risk assessments are simple enough to be used as templates and adapted for different uses. Assessments of this nature can be useful as a base level for threats throughout your organization. This method is convenient, but be careful when implementing a generic assessment because it may not be suited to every situation. Generic assessments are usually most effective in conjunction with other methodologies.
As the name implies, this methodology is primarily concerned with how location and environment affect risk. By including these considerations, an assessor can tailor an otherwise generic assessment to a particular department or location. Site-specific assessments are ideal for determining the severity of threats throughout your organization.
Dynamic risk assessments are specifically designed for environments or situations where risk changes frequently. They are performed in conjunction with traditional risk assessments, usually on the spot when a new risk emerges. These kinds of assessments are particularly useful for more high-risk positions like emergency services or health and safety.
Choosing the Right Risk Assessment Methodology for You
The first step in any risk assessment, regardless of methodology, is to determine what your risks are. The specific risks you face, their number, and their severity will affect what choices you make in the subsequent steps.
When choosing a risk assessment methodology, ask yourself what you’re hoping to learn with your assessment. Do you need the concrete data that a quantitative assessment will provide, or would qualitative results be more helpful? Are you looking for an overview of your entire organization, or a precise picture of one department or location? Asking these questions can help you narrow down your options and determine what methodology (or combination of methodologies) will best suit your needs.
You’ll also want to consider how your industry, location, size, and other factors affect your risk control requirements. Certain compliance frameworks required of your organization may require specific risk assessment techniques, and these demands should factor into your decision-making. Before you conduct risk assessments, make sure you understand the legal requirements that apply to your company.
ZenGRC Helps Businesses Assess Risks
Determining your company’s threat landscape can be a daunting task. Cybersecurity risks can change quickly and frequently, and a single assessment will not be sufficient to protect your company over time. How can you be sure that your information security measures are accurate and up-to-date?
ZenGRC is an integrated platform that allows you to track risk throughout your company. By creating automated workflows and alerts, ZenGRC allows you to examine threats in real-time and develop control measures before they can strike. Schedule a demo today and learn more about how ZenGRC can streamline your risk management process.