In the same way people block spam calls and lock their doors at night, businesses should maintain robust and effective cybersecurity. Cybersecurity is exactly what it sounds like: keeping your IT assets and services secure. Think of it as putting alarm bells on your IT networks, applications, corporate data (including data in the cloud), and computing devices.

That said, a company should check its cybersecurity more often than one might change a lock or update a blocked-call list. Cyber attacks evolve in their tactics and sophistication all the time, and your cybersecurity program must evolve along with them. Otherwise, an attacker might find a crack in your current system, crashing your IT systems.

This guide will help you understand the risk assessment process and what data breaches or cyberattacks to protect against. We’ll define key terms and give you the step-by-step process for assuring you have the best security controls and risk management for your company.

What Is Cyber Risk?

Cyber risk is the risk of your organization or business being harmed via access to your information systems. This could be your Wi-Fi networks, email, or another shared cloud service you use. Business owners must understand their cyber risks to keep all their information systems as secure as possible.

Understanding the breadth and scope of your cyber risk allows you to find the exact level of cybersecurity you need to keep all your systems secure.

For example, if you work in healthcare, you will require tight information security since your business is subject to HIPAA, the Health Information Privacy Assurance Act. HIPAA established specific privacy rules that protect patients’ Personally Identifiable Information (PII), and healthcare companies must comply with them.

Common Types of Cyber Risks

There are two fundamental categories of cyber risk: external and internal.

An external cyber risk comes from someone attempting to breach your systems outside your organization. These attempts are often categorized as a cyberattack and are frequently malicious.

An internal cyber risk comes from within your organization. This type of cyber risk is often the result of poor training and a lack of understanding of cybersecurity protocols. For example, an internal cyber risk could be an employee accidentally sharing a login via email.

There are many external cyber risks for you to be aware of. They include:

  • Malware. Malware is an unwanted program installed in a system that causes abnormal behavior. The Trojan virus is a famous piece of malware you may have heard of.
  • Ransomware. This malware locks users out of their accounts or services until the attacker is paid a fee.
  • Phishing. This social engineering cyberattack can come through your email, text messages, or other messaging systems. The message tries to trick the recipient into installing malware or sharing private credentials that give the attacker access to secure information.
  • DDoS. “Distributed denial-of-service” attacks occur when the attacker bombards the victim’s servers with bogus requests for service, which blocks legitimate requests from coming through. The server remains frozen until the attacker’s demands are met.
  • SQL injection. This is when cyberattackers manipulate the SQL queries, or strings of code sent to servers, to gain access to information that shouldn’t be available.

It’s important to note that not all cyber risks involve malicious outside attacks. Any risk to your network or data could be considered a cyber risk. This includes a sudden cloud crash or natural disaster that could put your business processes at risk.

What Is a Cyber Risk Assessment?

A cyber risk assessment is the first step in putting together the controls you need to protect your business’s assets. It requires that you assess all your potential entry points for a cyberattack while seeing what assets you hold that need security.

This may include client data, cloud storage, email systems, and hardware such as laptops or other connected drives. Once you know your valuable assets, you can store them as securely as possible.

What Is the Importance of a Cyber Risk Assessment?

Completing a cyber risk assessment brings several benefits.

First, you’ll gain a much-needed understanding of the assets your business holds.

You’ll also better understand how best to protect them from potential cyberattacks. Strong data protection means you don’t have to worry about phishing scams or malware. You and your team can enjoy a more efficient and productive work environment knowing you have the appropriate information security.

That isn’t the end of the job, however. You should regularly perform a cyber risk assessment to keep pace with changing protocols and cyberattack developments.

A routine information security assessment is the only way to protect you against attacks or outside risks. So consider performing a cyber risk assessment several times a year (at least every six months) to ensure that your protocols are up to standard and there aren’t new cyber threats eluding your attention.

How to Perform a Cyber Risk Assessment

You can perform a cyber risk assessment for your company by following a few simple steps:

Assembling Your Cyber Risk Team

To perform a risk assessment, you don’t have to be a cybersecurity expert. However, assembling an expert team to guide you will suit your company better. This can include a third-party agency to complete the evaluation, your Information Technology (IT) team, stakeholders from each department, and executives who can make decisions about company-wide changes.

Be sure to define the roles of each member of your assessment team so everyone knows what’s expected of them. For example, you should agree upon which stakeholder is responsible for which information system and how to best implement security controls for those systems.

Set the Parameters of Your Assessment

To set successful risk assessment parameters, first, identify the assessment’s goal. For example, you might need an audit for cyber insurance or want to understand your company’s current cybersecurity posture.

Next, decide on the scope of the assessment. For example, will you focus on one specific type of asset, or will you evaluate all assets company-wide? You’ll also need to know who you need in the room to ask questions during the audit. (This may increase the size of your original cybersecurity team from the first step.)

Also, consider the localization of your business. If your company only plans to work with customers in one country, use that nation’s security requirements to inform your parameters. If you plan on working with customers globally, meet all standards that might apply.

For example, if a company wants customers in the European Union (EU), it must follow the General Data Protection Regulation (GDPR). The GDPR is a data protection and security regulation for transferring personal information. On the other hand, a business that never plans to work in the EU or handle the personal data of EU citizens does not need to worry about GDPR compliance.

Determine Information Value

Your business has a lot of data to manage, and you’ll need to decide which information is most important to secure. This will help keep your risk assessment efficient and help small or medium-sized businesses afford the cost; the more you assess and secure, the bigger the budget needed.

One way to determine the importance of different data within your organization is to answer a few hypotheticals, such as:

  • What would happen if this data were breached?
  • Could your business continue without access to this data?
  • What would be the financial damage of this data being compromised?

Identify Assets for Prioritization

Once you’ve defined what data you’ll be assessing and securing, you should prioritize it.

What are the most critical information systems within your business? What system, if compromised today, would cause significant disruption or financial loss?

Once you prioritize, you can catalog the assets needed for assessment, including hardware, computers, drives, access credentials, and any other controls you may need.

Identify Threats & Vulnerabilities

The National Institute of Standards and Technology (NIST) offers a few guidelines for identifying the potential threats you might have. These are primarily for external risks, which we defined earlier as cyberattacks from outside your organization. They can be (but are not limited to):

  • Individuals: usually third parties
  • Groups: well-known hacker groups
  • Organizations: your competitors engaging in corporate sabotage

Most companies will focus on potential threats from individuals and groups, with some organizations considered depending on the industry.

After you identify threats, you should locate vulnerabilities. Vulnerabilities to your cybersecurity include poor firewall infrastructure or lack of education for internal employees.

NIST breaks these vulnerabilities into five categories ranging from Very High to Very Low, which you can see in greater detail within the NIST guidelines.

Calculate the Likelihood of Each Event

Not every potential threat is likely to happen, so do some risk analysis around which information security risks are most probable and which you can be less concerned about.

Some cyberattacks might never come to pass if your business complies with information security requirements from regulators or industry groups. For example, companies handling healthcare data must meet standards of the aforementioned HIPAA compliance; those handling credit card data must adhere to the Payment Card Industry Data Security Standard (PCI DSS).

After you know which incidents are least likely to occur, you should do a risk analysis for which potential threats have a higher chance of happening. These cyberattacks are the ones you should prioritize security controls for.

Evaluate Controls for Each Cyber Event

By this point in the cyber risk assessment, you should have a list of potential threats that could occur. Then, for each possible event, you and your team should evaluate what security controls you can implement to reduce the threat.

Some controls include security policies that employees must read and agree to, onboarding procedures that assure new hires understand those policies, and administrative controls to enforce data security. This last item could include secure logins, networks, and access.

Discuss these controls with your stakeholders to make informed decisions about the company’s best risk management.

Build a Risk Matrix

A risk assessment matrix (also known as a risk control matrix) is a tool used in project planning during the risk assessment stage. It detects and captures project threats and assesses the possible harm or disruption caused by those risks.

The risk assessment matrix visualizes the risk analysis and categorizes threats based on their level of likelihood and severity or effect. This tool is a simple, effective solution for all team members and key stakeholders to gain a comprehensive perspective of the project risks.

ZenRisk screenshot
A look into the Risk Matrix of Reciprocity ZenRisk

Prioritize Risks

Now that you’ve prioritized the data assets within your organization, next, prioritize their risks. Data breaches within different information systems will carry other consequences and risks to your business. During the risk assessment process, you and your stakeholders must prioritize which types of cyber threats you are most concerned with.

For example, as discussed earlier, you might not need to be concerned with a competitor’s cyberattack, but you may want security controls against individual hackers. The NIST guidelines offer in-depth suggestions for this prioritization that you can use to make informed decisions.

Document the Results

Once you’ve completed your cyber risk assessment, keep detailed documentation on your parameters, evaluations, and analysis. Since a risk assessment is not a one-time event, you’ll be able to compare and contrast your findings each time you complete a new assessment.

This will help your company improve its information security over time and ensure that you are always ready to adapt to new potential threats.

Risk Assessments with Reciprocity ROAR

Reciprocity can help your business manage cyber risk, monitor potential threats, and improve data security from a single cross-platform dashboard.

Reciprocity ROAR is an integrated software platform that best equips your organization to monitor changing risks and vulnerabilities across the enterprise.

You’ll see all information security risks in one dashboard, allowing you to note changes and export data into shareable heatmaps and reports. In addition, the customizable risk calculation feature takes the guesswork out of the final stages of your cyber risk assessment, giving you multivariable scoring using frameworks from NIST or other organizations.

Finally, you’re never alone with Reciprocity ROAR. You’ll have access to risk experts who can help you build the right risk program for your business.

Request a demo today!