In the digital age, you and your organization heavily rely on information systems and technology to conduct business. While digital processes help improve efficiency and grow your business throughput, they bring significant risks.
For instance, the 2019 Internet Security Threat Report by Symantec reports that web attacks rose by 56% in the last year alone. It further stated: “attackers also increased their use of tried-and-true methods, like spear-phishing, to infiltrate organizations. While intelligence gathering remains their primary motive, attack groups using malware designed to destroy and disrupt business operations increased by 25 percent in 2018,” rising the risk bar for every organization.
That’s why worldwide businesses follow a standard risk assessment model that helps assess and mitigate cyber risks called cyber risk assessment. That said, let’s discuss cyber risk assessment to understand its fundamentals and usage.
What is Cyber Risk Assessment?
Cyber risk assessment — a fairly autological term — defines the process of assessing the cyber risks posing to your organization. The primary purpose of a risk assessment is to gather an executive summary on the risks to help inform the decision-makers for supporting proper risk mitigation responses.
What is cyber risk? A cyber risk refers to any risk related to financial loss, damage to an organization’s reputation, and disruption of operations or services occurring due to the failure of information systems and technology. The term encompasses a variety of risks including but not limited to unauthorized access to information systems, accidental or unintentional security breaches or data leaks, and operation risks due to poor system integrity and security.
According to National Institute of Standards and Technology, “risk assessments are used to identify, estimate, and prioritize risk to organizational operations (i.e., mission, functions, image, and reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation and use of information systems.” When the risk assessment only refers to the cyber risks (comprising online and offline risks), it’s called cyber risk assessment.
Why is it important? Without a cyber risk assessment to inform you about the potential cyber risks, you may inefficiently invest business resources. In other words, you may try preparing for a fight that may never happen. After all, there is little point in implementing and supporting mitigation measures against the risks that may not occur or may not impact your business if they occur.
Moreover, you may overlook some risks that are more likely to happen or may cause significant damage to your business. In either case, your business must avoid preparing for less-likely events and instead prepare for more-likely events. That’s the reason industry-proven frameworks, laws, and standards — like DPA and GDPR — require organizations to conduct risk assessments.
How does it Help Organizations?
A cyber risk assessment helps your organization be ready, take better decisions, efficiently use resources, and prepare risk mitigation measures for cyber risks. But that’s not all; there are many more benefits of a cyber risk assessment.
1. Details your Organization Functions
A cyber risk assessment is important since “cybersecurity is as much about knowing how your organization functions as it is about technology. Think about what people, information, technologies and business processes are critical to your organization. What would happen if you no longer had access to them (or if you no longer had control over them)? For example, your organization might be able to function reasonably well for a few days without email, but loss of a Customer Relationship Management service might prevent essential day-to-day tasks being completed,” according to the National Cyber Security Centre of the UK.
That said, a cyber risk assessment generates self-awareness in an organization, helping the decision-makers understand the organization’s strengths as well as weaknesses. Thus, they are better equipped at deciding the organizational areas wherein they need to invest resources and help grow for a better future.
2. Helps Avoid Security Incidents
After a cyber risk assessment, an organization is clear of its security risks. If the organization works on the analysis and improves its security implementations, it helps mitigate future cyberattacks and data breaches. That means a well-done cyber risk assessment helps fortify security and avoid security events.
3. Helps Reduce Long-term Costs
Since a cyber risk assessment helps to identify potential risks, which is the first step at mitigating risks and preventing security incidents, it saves financial and other resources in the long-run though it may require an initial investment.
Moreover, if your organization is protected against security incidents, there is less risk of financial loss or security incidents that may cost the organization. For example, Equifax — one of the largest credit reporting agencies in the US — met a data breach in September 2017, which incurred a cost of more than US$650 million in legal proceedings and claim settlements. If Equifax had done better cyber risk assessments, it could have avoided this hefty financial loss.
4. Helps Filing a Cyber Insurance
Cyber insurance is an important insurance for any organization — especially in this dire time of growing cyberattacks. Without cyber insurance, a company may run out of business after a data or security breach. For instance, according to a survey done by VIPRE in 2017, two of every three uninsured SMBs (i.e., 66% of SMBs) are not able to get back to business after meeting a data breach.
And an organization must get a cyber risk assessment before filing for cyber insurance. So, it helps your organization get cyber insurance, which further helps your organization to remain afloat — after a data or security breach.
5. Helps Honor Legal Obligations
Finally, a cyber risk assessment also assists in fulfilling legal and regulatory requirements. For example, HIPAA (Health Insurance Portability and Accountability Act) and PCI DSS (Payment Card Industry Data Security Standard) mandates an organization to regularly perform cyber risk assessments. Also, it may be part of federal or legal requirements in your state and/or country.