What is Risk Management in Cybersecurity?

How do you effectively protect your organizational data from cyber threats? With digitalization, the accelerated growth of artificial intelligence tools and increasing dependence on information technology to keep businesses running smoothly, organizations are exposed to ever more risks.

Cybercrime is a growing threat, with the global cost of online crime expected to reach a staggering $23.84 trillion by 2027.

Let’s explore the essentials of risk management in the context of cybersecurity to help you understand how to identify, assess and mitigate cyber threats effectively.

What are cyber threats?

Every day, organizations face a growing range of cyber threats, from phishing schemes targeting unsuspecting employees (you know the ones – usually seemingly addressed from your boss) to sophisticated ransomware attacks that can paralyze entire networks. You might remember DarkSide’s ransomware attack on Colonial Pipeline (CP), which was the largest-ever attack on US oil infrastructure/ CP reportedly paid DarkSide 75 BitCoin (around $4.4 million) to get back into their systems, with the FBI able to seize back $2.3 million.

It’s worrying then that cyberattacks are not only becoming more frequent, but also more sophisticated. This means we must be ready to take a more proactive approach to threat recognition to stay ahead of the evolving threat landscape.

The faster these threats can be identified, the more quickly your organization can respond to potential risks before they escalate into serious (and often costly) breaches.

What is risk management?

Risk management is the process of identifying, prioritizing, managing and monitoring risks. Let’s imagine you’re playing a game of chess – risk management is like thinking ahead and planning your potential moves. You anticipate what could go wrong, like losing a piece or falling into a trap, and you plan your strategy accordingly. So, just as you think several steps ahead in a game of chess to avoid getting into a bad position, risk management in business involves thinking ahead and making plans to minimize the impact of potential problems.

Only there’s a little more at stake when it comes to risk management in business than there is in losing a game of chess, of course. And while we can never 100% eliminate risk, we can work to reduce the impact and likelihood of threats occurring.

Assessing the impact of risks

Risk assessment is a cornerstone of effective cybersecurity. It involves a detailed analysis of potential threats, vulnerabilities and impacts, and evaluating how these could impact your organizational operations:

• Threats are the dangers outside, ready to attack (e.g. a hacker attempting to breach your company’s database to steal customer information).
  
  
• Vulnerabilities are weak points in your defenses (e.g. outdated software or weak passwords that can be guessed easily).
  
  
• Impacts are the result of threats exploiting vulnerabilities (e.g. if a hacker successfully breaches your customer database due to the vulnerabilities, customer data could be stolen leading to financial loss for the customer and reputational damage for your company).
  
  

It’s about knowing which ones to focus on by pinpointing the most critical and allocating resources accordingly.

By using tools such as risk matrices and impact assessments, you can more easily prioritize risks based on their severity and impact. Let’s take a financial services firm, for example. Let’s imagine it identifies a potential data breach risk associated with mobile banking – through rigorous assessment, the firm can put in place tailored controls to mitigate this risk before the worst happens. These controls could include stronger data encryption, authentication or secure coding practices.

Implementing risk mitigation strategies

To mitigate cybersecurity risks, you’ll want to take a multifaceted approach. Encryption technologies, two-factor authentication and comprehensive security policies are just the beginning.

There’s also the human element to think about, which means it’s crucial that there are regular training and awareness programs on risk. Risk isn’t just your responsibility – the whole organization needs to be able to recognize and respond to cybersecurity threats (what to do when they suspect a phishing email or the importance of regular system updates are just two examples).

Backup and disaster recovery is also a key component in any risk mitigation strategy. Putting robust backup procedures in place will help ensure your data can be recovered in the event of a cyber attack or other incident related to data loss. Likewise, by developing and testing a disaster recovery plan, you’ll be equipped to restore any IT operations critical to business functions should a major disruption happen.

In the case of third-party vendors, vendor risk management involves assessing and managing risks associated with those who have access to your organization’s systems and data. For help tiering your third-party risks, check out our handy free template.