Every business is vulnerable to risk, and especially from security threats. Whether you have valuable internal data such as trade secrets or intellectual property; data from your customers such as credit card information; or even employees’ personal health records, that information is a target for cybercrime.
At the same time, that information is also central to your business operations and success, so protecting it must always be a priority. And as businesses rush forward with digital transformation or remote operations — a trend sharply accelerated by the pandemic — implementing protective measures against cyber risks has never been more urgent.
In this post, we’ll provide guidance on the types of risks businesses face, as well as best practices on how to manage that risk properly and prevent cyberattacks.
What are the types of business risks?
Before you can implement risk management properly, you need to understand the types of risk that apply to your industry and business. Below is a list of the top business risks companies face today.
1. Technology Risks
The more we embrace technology and innovation, the more cybercriminals try to turn those technological advances against us. They find new ways to launch data breaches, identity theft, and financial fraud, all through online scams, malware, phishing attacks, and the like.
Technological risks can have severe consequences on your business operations and reputation. They can also bring hefty financial penalties from regulators and costly litigation if data loss occurs. It’s critical that businesses embrace security software and threat detection to intercept these risks before they cause harm.
2. Financial Risks
For those in the financial services world, extending credit or adding to your organization’s debt load brings financial risk: the chance that economic conditions, fluctuating interest rates, and other factors might leave you or your clients unable to pay their bills.
Furthermore, financial institutions procure, process, and store a lot of client financial information which must be protected against unauthorized access or theft.
To manage their risk, financial institutions should diversify their loans and holdings so that they can withstand economic contractions.
3. Reputation Risks
All businesses have faced the risk that unhappy customers, bad press, lawsuits, and other events might harm the company’s reputation. With the advent of the internet and social media, however, bad news can travel far and wide, greatly amplifying reputational risk.
To better manage this risk, companies must monitor their digital footprint and be ready to respond to negative actions when those events occur. It’s also important to show the public that you understand the situation that’s happened and are taking the steps necessary to improve your business or product in response.
4. Business Continuity Risks
Continuity risks can include natural disasters, a server outage, or a cybersecurity attack that causes your business applications to go offline. The exact nature of the fail doesn’t necessarily matter — your organization’s ability to continue operations and recover as quickly as possible does.
Business continuity software can help you to address potential operational risks and establish a disaster recovery and business continuity plan that will sustain your business after an outage or incident.
5. Third-Party Risks
If your business outsources some of its operations to a third party or relies on a vendor product to support its operations, then you face third-party risks.
Managing third-party risk involves conducting a risk assessment not just within your own business, but among your vendors. It’s important that you understand, assess, and mitigate as much potential risk introduced by your vendors as possible.
Proper risk management can help you to reassess their performance, refine your project or offer, and maintain a strong relationship with your vendors.
6. Compliance Risks
Many businesses have the added responsibility to adhere to industry standards or legal mandates that regulate your industry.
Ignoring these risks can result in significant fines and penalties. It’s your responsibility to understand which regulatory compliance obligations apply to your business, and how you can achieve and maintain compliance.
It’s also imperative that you remain vigilant by tracking compliance documentation, monitoring your compliance stance, and staying abreast of updates in these standards and regulations.
What are the best ways to protect against business risk?
Although you can never eliminate risk entirely, assessing, managing, and monitoring it can help your organization avoid some of the severe penalties associated with business risk.
1. Educate your team on security best practices
Your business and its employees should understand and implement several common-sense cybersecurity measures, including:
- Strong passwords
- Network security protocols, such as a firewall and restriction from using public networks
- Bring-Your-Own-Device (BYOD) protocols
- Limited access to sensitive information
- Secure storage systems for confidential or sensitive data
We recommend that you both provide employee training and implement security policies that employees must follow. Also, conduct user access reviews from time to time to understand how your team members use data and access critical systems.
2. Secure your information systems
All of your information systems, whether on-premise hardware or cloud-based software, should be safeguarded with comprehensive security protocols, data encryption, and continuous monitoring software.
This includes computer hardware, hard drives, cloud infrastructures, and IoT devices.
3. Implement a disaster recovery & business continuity plan
As we discussed earlier, your operations and information systems should have backups and redundancy in the event of a natural disaster, outage, or human error.
Even if your physical property or hardware is destroyed, there should be a plan in place with a backup location, system, and protocols so that you can continue operations despite the loss.
4. Purchase a business liability insurance policy
In addition to your proactive measures, liability insurance can help to protect your assets in the event of a covered loss.
Every insurance company and policy differs on what it will and won’t cover, so be sure to find a business insurance policy that reimburses for damaged equipment or protects your financial assets in the event of a lawsuit.
How can GRC software protect my business against risk?
ZenGRC’s SaaS compliance platform gives you one-touch insights into the effectiveness of your enterprise risk management strategies.
Our risk software heat maps provide user-friendly, color-coded dashboards showing high, low, and medium risk areas within your organization — so you can take action efficiently, and share the reports with your C-suite and board of directors.
Our powerful software aligns with more than a dozen compliance frameworks and standards to help you map your risks and controls across frameworks, highlights any gaps, and tells you how to fill them–for ERM that’s worry-free.
Worry-free risk management in the Zen way! To learn more about how ZenGRC can help your business, schedule a demo today.