A digital security risk is any action or event that could cause loss of or damage to computer software, hardware, data, processing capability, or information. Digital risk management is an organization’s effort to keep such risks at acceptable levels.
It’s crucial to understand that a risk is not the same as vulnerability. A risk is any event that could lead to an undesired outcome or loss. A vulnerability, on the other hand, is a weakness that can be exploited. More specific to cybersecurity, a vulnerability is a flaw in the IT system that leaves the organization susceptible to undesired outcomes and cyber threats such as cyberattacks or data loss.
Digital Risk Management Defined
Digital risk management is a subset of business management that uses processes to improve the evaluation and monitoring of digital risk. This includes all kinds of risks that affect the organization’s financial performance, operation, or reputation, such as cybersecurity risks, operational risks, and third-party risks.
Types of Digital Security Risks
Understanding the different types of digital security risks is critical for data risk protection. Below are the six most common digital security risks to your business.
Cybersecurity risks include cyberattacks and information security threats, such as data breaches, malware, DDOS attacks, and social engineering. Cybercriminals try to gain unauthorized access to sensitive information for malicious purposes. For instance, the cybercriminal may try to extort an organization or interrupt their normal business processes.
Workforce risk is any workforce-related problem that could present a risk to an organization’s objectives. Common examples include high employee turnover and skill shortages. With more workforces going remote, there has been an increase in digital threats such as cyber risks and phishing attacks. Cybercriminals are exploiting weaknesses arising from home networks and computing devices to steal data.
Compliance risk refers to threats an organization faces because some of its operations may violate laws, rules and regulations, and other requirements that apply to your business. Failure to comply with regulatory requirements for business operations – say, to maintain the privacy of customer data, or to retain data for a certain period of time – can lead to costly investigations, unwanted media attention, and monetary penalties.
Third-party risks are associated with outsourcing processes or activities to third-party vendors or service providers. Any vulnerabilities related to intellectual property, data, customer information, healthcare details, or other sensitive information can lead to third-party risks.
Artificial intelligence risk
As more organizations embrace artificial intelligence and automation, they must be more aware of artificial intelligence risks, such as AI bias, faulty predictions, and flawed decision-making. Business owners and chief information security officers (CISO) will have to consider ways to protect AI applications from unauthorized manipulation, which means giving more attention to user access controls and IT general controls.
Data privacy risk
Data privacy risk is the risk of not being able to protect sensitive and personal identifiable information (PII). Hackers can easily misuse sensitive data like full names, email addresses, physical addresses, dates of birth, and passwords to commit identity fraud and other cybercrimes.
Effective Digital Risk Management Strategies
First, identify critical assets, such as IT systems, including databases, websites, and payment processing systems, and determine their vulnerabilities.
Second, understand the threats to the business. Understanding how threats behave can help companies tighten the cybersecurity of their systems.
Third, check for exposed assets. Organizations should identify sources of unwanted online exposure, including social media, file-sharing sites, and Git repositories.
Fourth, develop a mitigating strategy to protect against digital risks. This includes:
- Reducing the attack surface by identifying the systems that are vulnerable and removing them.
- Assuring that information security teams keep threat models updated by considering critical digital assets, including those associated with third-party organizations and supply chains.
- Integrating digital risk management into general incident management processes.
Additionally, companies should plan for continuous risk assessment, because assessing risk on an ongoing basis will improve their cybersecurity posture and protect the value of the business.
Managing digital risk takes time and can be difficult. As such, information security teams first have to understand what digital risk is, as well as the types of digital risk that exist so they can implement the most effective digital risk management strategies.
Protect Your Business from Digital Risks with ZenGRC
Reciprocity’s ZenGRC is sophisticated enterprise software that helps organizations stay abreast of digital risks and compliance management.
Using ZenGRC’s single, integrated experience, your security and compliance teams can get useful insights for effective risk mitigation and simplified audit and compliance management. Its risk heatmaps, dashboards, and reports can provide greater visibility across your organization, allowing you to manage risks and mitigate business exposure more effectively.