A risk analysis is one step in the overall cybersecurity risk management and risk assessment process. The analysis entails examining each risk to the security of your organization’s information systems, devices, and data and prioritizing the potential threats.

Once the analysis is done, you know where to allocate your resources to prevent cyberattacks and, should a data breach occur, which systems to prioritize so your ability to do business can continue with little or no disruption.

Several regulatory and industry frameworks specify the need for robust security controls and outline the necessary steps for implementing them. One is the National Institute for Standards and Technology (NIST) Special Publication 800-30, Rev. 1, Guide for Conducting Risk Assessments. Another is International Organization for Standardization (ISO) standard ISO/IEC 27001:2013, Information Security Management.

Another ISO document, ISO 27005, provides guidelines for information security risk assessments and helps design risk-based information security management systems.

Risk analysis is one of the most important steps in those assessments. This article will examine how such an analysis should be done.

How Do You Define Risk Analysis?

Risk analysis identifies and analyzes the potential impact that could adversely affect key business initiatives or projects. This process is performed to help organizations avoid or mitigate those risks.

The different types of risk analysis include considering the possibility of adverse events caused by natural disasters, such as severe storms, earthquakes or floods; or adverse events caused by malicious or accidental human activities. An essential part of risk analysis is identifying the estimated damage from these events and the likelihood of their occurrence.

What Is the Difference Between Risk Analysis and Risk Assessment?

As we explain in our article risk assessment versus risk analysis, there is a critical distinction between risk assessment and risk analysis. Risk assessment is a larger process where all potential threats are considered. During the risk analysis process, the level of each risk is determined. Both fall under the broader umbrella of risk management tools.

An organization should conduct various risk assessments, to identify all potential hazards. A cybersecurity risk assessment is just one of those numerous assessments, and all of them include risk analysis as a crucial step.

How Do You Perform Risk Analysis in Cybersecurity?

Within the regulatory and industry frameworks are several best practices for performing a cyber risk assessment and analysis. These steps for a cybersecurity risk assessment will help identify specific vulnerabilities based on your organizational needs and the common risks in your industry.

Create a Risk Management Team

The first step in performing a security risk analysis is to create a cross-enterprise group that can deliver the necessary attention to the details of the risks to your data security and information technology (IT) systems. Team members should include:

  • Senior management
  • Chief information security officer (CISO)
  • Privacy officer
  • Legal
  • Marketing
  • Product management
  • Human resources
  • A manager from each operating business group

Identify and Map Your Systems and Assets

Document every IT asset on the network, including computers, tablets, routers, printers, servers, and phones. In addition, you must identify how they are used and interconnect with one another.

Catalog the software-as-a-service, platform-as-a-service, and infrastructure-as-a-service used by every department. Specify which departments and vendors have access to those services. Include types of data, and categorize sensitive data. Note how information travels through the network and among stakeholders.

Identify Vulnerabilities and Potential Threats

Your risk management team must identify threats and vulnerabilities from all parts of your organization. Software-based vulnerability scanners can make it easier to locate vulnerable equipment, but your team’s expertise is necessary to determine flawed security policies, physical vulnerabilities, and other cyber threats hidden under your network and systems.

For example, does your business use digitally connected “internet of things” (IoT) devices? How susceptible are employees to phishing emails that could allow malware on your system? Other potential threats include:

  • Unauthorized access to your network
  • Misuse of information or data leaks
  • Ransomware attacks
  • Human error or negligence
  • Process failures
  • Data loss
  • Data breaches
  • Disruption of services

Assess Your Risks

Using your information asset catalog, examine the most significant risks for unauthorized access. Scrutinize every type of information, vendor, system, network, software, and device to determine its danger.

During this phase, your risk management team must use its combined knowledge and intuition to list worst-case situations, ranging from pandemics to natural disasters to economic calamities. The result is a list of all risks that can affect your organization.

Now, at last, we get to the crucial step: performing an analysis of those risks.

How to Perform a Risk Analysis

A risk analysis, performed with the aid of a risk register (that is, a formal list of your organization’s risks), considers two main factors:

  • Probability: The likelihood of an attack
  • Impact: The operational, reputational, or financial effect of the risk on your organization

These two elements will help you determine the severity of each potential risk in your register and improve decision-making so that you can develop strategies for each risk according to your security posture and tolerance. You can risk remediation in several ways: accept, avoid, transfer or mitigate risk.

Set Cybersecurity Controls

To mitigate risks, you must develop cybersecurity controls to reduce your company’s risk exposure and prevent security incidents.

Cybersecurity controls are safeguards used to prevent, detect and mitigate cyber threats and attacks. These mechanisms can take a variety of forms depending on your unique threat landscape. Examples include physical controls, such as security cameras or guards. Technical controls might include firewalls or two-factor authentication.

Risk mitigation can also help your data protection efforts, compliance with regulations and requirements, and threat response.

Monitor and Audit

You need to watch your IT systems over time to assure that cybersecurity measures are working as expected. Establish performance metrics for your security controls, and then monitor those controls to confirm that activity stays within your risk tolerance. (In addition, continuously monitor networks, systems, and devices for suspicious activity.) Also conduct annual audits of the efficiency of your cybersecurity program.

What Are the Benefits of Performing a Cybersecurity Risk Analysis?

Cybersecurity risk analysis is a requirement for many regulators and cybersecurity frameworks. It delivers several benefits to organizations that perform analyses on a regular basis as part of their IT security strategy.

  1. Long-Term Cost Reduction

    Early identification and prevention of risks in your organization can reduce operational costs. For example, restoring or restructuring your IT infrastructure is much more costly than developing preventive measures against cyber threats and outages. Plus, strong controls drive more consistent processes and higher quality.

  2. A Template for Future Assessments

    Implementing a formal cyber risk assessment and analysis in your organization makes it easier to repeat these processes. Not only will you have personnel with first-hand knowledge of the concepts, but you will also have the right tools and templates to streamline activities for managing risks.

  3. Organizational Awareness

    Identifying your vulnerabilities and attack vectors allows you to see the organization’s complete security picture. It identifies your organization’s weak areas, allowing you to improve risk communication and decision-making.

  4. Prevent Data Loss, Data Breaches, and Regulatory Fines

    A cybersecurity risk analysis leads to stronger risk management, which helps to prevent threats from striking. That, in turn, means less chance of data lost through breaches, and less chance of the consequent regulatory enforcement action – including monetary penalties.

Who Should Be Responsible for a Cybersecurity Risk Assessment?

Ideally, your organizations should have a specialized in-house team with risk analysts who conduct risk assessments (if resources allow). This team should include IT personnel who understand your digital and network architecture, and team members who understand the organizational structure, how information flows, and third-party interactions.

Small companies may lack the necessary personnel in-house to conduct a complete evaluation; in that case, you could hire an outside consultant. Companies also use various cybersecurity tools to automate security controls, monitor their cybersecurity score, prevent breaches, issue security questionnaires, and decrease third-party risk.

Develop a Mitigation Plan to Reduce Potential Risks

Risk management is fundamentally about recognizing dangers and taking precautions to avoid them. It provides businesses with a strategy for deciding which risks are worthwhile and which are not, delivering better results for their bottom lines.

The risk management process is a series of steps to identify, analyze, and respond to the potential harm of risk; to keep your business on track and meeting its objectives. Maintaining a risk management plan is essential because it reveals potential threats within the business before they can hurt your operations.

Risk management also generates several benefits, such as preventing data breaches and driving the need for a cybersecurity program. Cost/benefit analysis activities related to security, operational, business, and other metrics help develop risk perceptions and justify investments.

Manage Cyber Risks Seamlessly with Reciprocity ZenRisk

Keeping track of everything might seem daunting, especially for cyber risk. But on the other hand, threat actors constantly change their methods and technology. As a result, you must also evolve to protect your systems, data, and brand reputation.

Reciprocity ZenRisk is a governance, risk management, and compliance platform that can assist you in implementing, managing, and monitoring your risk management framework and remedial assignments. Workflow management features offer easy tracking, automated reminders, and audit trails. Insightful reporting and dashboards provide visibility to gaps and high-risk areas.

When audit time comes, ZenRisk’s document repository is a “single source of truth” that allows you to retrieve the proof you need to prove data confidentiality, integrity, and availability.

With ZenRisk, cyber risk management almost takes care of itself, freeing you to focus on other, more critical issues, such as growing your business and increasing your bottom line. Schedule a free demo and get started on the road to worry-free risk management.

Have a strong compliance program?
Use it as a foundation for risk management.