A cybersecurity risk assessment is an examination of an organization or potential vendor’s current technology, security controls, policies, and procedures and which potential threats or attacks could affect the company’s most critical assets and data.
Organizations can use cybersecurity risk assessments to understand their ability to protect sensitive data, information, and critical assets from cyber attacks. These risk assessments are essential because they help businesses mitigate or reduce risks, protecting sensitive information and customer data.
Risk assessments are also important for verifying that third-party vendors are meeting minimum security requirements set by the business and ensuring that those vendors won’t pose a risk to the organization or its supply chain.
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What Should a Cybersecurity Risk Assessment Include?
Whichever established risk assessment framework the firm uses, it should focus on its information assets and information systems, aiming to achieve the following business objectives regarding cyber risk:
- Identification
- Assessment
- Prioritization
Risk assessments need to evaluate the existing security threats and where the organization is vulnerable. Additionally, risk assessments need to inform key stakeholders of the identified risks so that they can decide on a remediation plan.
A cybersecurity risk assessment usually includes a period of risk estimation and risk evaluation. For each, the risk assessors should develop ways to treat the risks uncovered or highlighted by the risk assessment.
The essential stages of a cybersecurity assessment are as follows:
- Identification of threats and vulnerabilities
- Risk and vulnerability assessment using techniques such as penetration testing to determine the likelihood of exploitation and the probable impact of identified security threats and vulnerabilities
- Controlling the risks
- Recording the findings
- Reviewing security controls
For an overview of the top features of an ideal risk assessment solution, read this post comparing the top third-party risk assessment software options.
Some questions that a risk assessment should include are:
- What are our organization’s most important assets or data?
- What type of data breach would have the most significant impact on our business and customer data?
- What is the level of impact for each identified cyber threat?
- Which vulnerabilities are most likely to be exploited and what would be the impact if they were exploited?
- What is my organization’s accepted risk level or total risk appetite internally and externally?
Refer to this example of a vendor risk assessment to understand how it's structured and the data it requires.
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Who Performs a Cybersecurity Risk Assessment?
The business or organization owner is responsible for ensuring risk assessments take place. However, a designated individual or IT team can take ownership of the risk assessment process, especially in small businesses.
Either way, risk assessments remain essential because they help stakeholders make informed decisions about managing business operations and cybersecurity and reduce identified risks.
A security team is normally required for an enterprise cybersecurity risk assessment. It can help when these team members are from different departments within the organization as this encourages a broad view that makes covering all information security risks more likely. Members of the team might include:
- Human resources
- Department managers
- Chief Technology Officer (CTO)
- Chief Information Security Officer (CISO)
Learn how to create a vendor risk assessment matrix >
The cybersecurity risk assessment process is often carried out by a virtual CISO and/or other outsourced cybersecurity experts because they have the experience, expertise, and compliance understanding to provide a comprehensive picture of the effectiveness of an organization’s information security systems against the current cyber threat landscape.
Related: Creating a Vendor Risk Assessment Framework (6-Step Guide)
Cybersecurity professionals will typically use an established framework, such as The National Institute of Standards and Technology Cybersecurity Framework (NIST) or The International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) TS 27110, to establish standardized criteria regarding risk.
Furthermore, ISO 27001 is a helpful set of standards that can help organizations structure how they handle information security risks, but more on these in a bit.
Find out how UpGuard helps businesses conduct cyber risk assessments >
How Often to Perform a Cybersecurity Risk Assessment
According to ISACA, a comprehensive enterprise security risk assessment is required at least once every two years.
Every time a business undergoes a significant information technology change, such as an updated system or a reconfiguration of computer networks, it is recommended to conduct a cybersecurity risk assessment. Organizational changes and changes to the cyber threat landscape will affect the organization’s risk level.
Ideally, the risk environment will be monitored and reviewed continually. The threats from cyber attacks, such as phishing, malware, ransomware, and social engineering, are constantly evolving, so cybersecurity controls must evolve, too.
Regularly reviewing an organization’s security controls is essential because they may lose effectiveness over time. For example, consider the current trend from password authentication alone toward two-factor and multi-factor authentication. Another example is the increased use of online encryption protocols and how the General Data Protection Regulation (GDPR) has led to more rigorous data protection procedures and policies online.
Related: How to implement a vendor risk assessment process.
To streamline the process of conducting your own risk assessments, download your free cybersecurity risk assessment template.
Why Perform a Cybersecurity Risk Assessment?
A cyber risk assessment identifies areas that need more robust cybersecurity controls and helps an organization prioritize according to its business objectives and which cybersecurity threats are most likely and most severe. An organization can define its risk tolerance level through the risk assessment process.
Having performed a cybersecurity risk assessment, organizations can communicate clearly with stakeholders, including staff, shareholders, business partners, third-party vendors, outsourced IT security, and customers. Each party will then have the knowledge to make informed decisions regarding their IT infrastructures and current cybersecurity programs.
Part of a cybersecurity risk assessment is creating documentation about the organization’s information security. This documentation is useful in several ways, including the following:
Strategizing Risk Management
With accurate, current information on an organization’s security posture, the security team or other stakeholders can make informed decisions about risk and plan accordingly. Proper risk mitigation and remediation plans are key strategies for improving an organization’s overall security program and cyber maturity.
Lowering Cyber Insurance Premiums
A risk assessment report demonstrates to cyber insurers that the organization understands its risks and has taken the necessary steps to mitigate them, reducing the likelihood of risks and their potential impact. Evidence of lowering risk tends to allow cyber insurers to offer lower premiums.
Creating Incident Response Plan s
An incident response plan helps an organization deal with a cyber attack or another cybersecurity incident. The speed with which a firm responds to an incident can determine how well its reputation survives and the extent of the financial damage caused by a data breach.
Businesses with incident response plans reduced their data breach damage costs by more than 60% compared to the global average. Developing an incident response plan necessitates a full appreciation of the potential threats to an organization, making a risk assessment invaluable.
Demonstrating Readiness to Business Partners and Customers
With a completed risk assessment, a firm can face scrutiny from third parties. Increasingly, business owners realize that third-party solution providers and other business partners increase their attack surface. The same applies in the other direction. By identifying, assessing, and evaluating risk, businesses can take appropriate action to improve security, making them more viable business partners.
Avoid Regulatory Penalties
Penalties for compliance standards, such as HIPAA, can be significantly more punitive if the Office for Civil Rights (OCR) discovers that the organization did not perform an adequate risk assessment to prevent a data breach.
Like HIPAA for the healthcare sector, The Payment Card Industry Data Security Standard (PCI DSS) also requires the completion of a formal cybersecurity risk assessment for companies accepting payments by debit and credit card. The organization must also make its recommendations, methodologies, and security policies explicit following the latest risk assessment.
