A Conversation About Risk.

It’s all about risk! Conversations in security often deal with the concept of risk, whether or not you and your company have a formal risk management program or explicitly talk about risk.

In the corporate context, risk is your organization’s exposure to negative outcomes. If your office is located on the coastline, then you may have the risk of hurricanes hitting the coast and making your office unusable for a period of time. Being unable to utilize an office may be a simple inconvenience for some organizations and have the potential to put other organizations out of business. In this way, risk and how risk is managed is unique to each organization.

Addressing risk. Key to the concept of risk is that risk can never be removed or deleted. When addressing risk, one has only four options:

  • Acceptance – Accepting a risk means just living with it. Acceptance does not imply a lack of care or consideration, it’s just that the costs are higher than the losses. Acceptance is often thought of as “the cost of doing business.”

  • Avoidance – While the risk cannot be removed, the activity that exposes one to the risk can simply be avoided altogether. Avoidance occurs when one cannot Accept the risk. In the business context, this may mean not launching a particular product or entering a particular new market.

  • Mitigation – Mitigation is an approach to risk, often requiring investment of time and/or money, where one attempts to (1) minimize the probability of an event occurring and/or (2) minimizing the impact of the event on the organization. Examples of mitigation include diversification, redundancy, and hedging.

  • Transferal – Sometimes referred to as “risk sharing,” transferal is when a risk is moved from the organization to another entity. The two most common forms of risk transferal is (1) outsourcing and (2) insurance.

Calculating Risk.

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Calculating cyber risk is a crucial aspect of managing and mitigating potential threats to your organization’s digital assets. While specific methodologies may vary, here are general steps and considerations you can follow:

  1. Identify Assets: List all digital assets, including hardware, software, data, networks, and intellectual property.
  2. Identify Threats and Vulnerabilities: Assess potential threats and vulnerabilities that could affect your assets. This includes external threats (e.g., hackers, malware) and internal vulnerabilities (e.g., weak passwords, outdated software).
  3. Risk Assessment: Evaluate the likelihood and potential impact of each identified threat on your assets. Consider the consequences of a successful attack, such as financial losses, reputational damage, and legal consequences.
  4. Assign Values: Assign values to assets, threats, and vulnerabilities. This may include financial values, but also consider non-financial impacts such as operational disruption, loss of customer trust, or regulatory fines.
  5. Calculate Risk: Use a risk assessment formula to calculate the overall risk for each identified threat. A common formula is:
    Risk = Threat × Vulnerability × Impact
  6. Prioritize Risks: Rank risks based on their calculated values. Focus on high-priority risks that pose the greatest threat and potential impact to your organization.
  7. Risk Mitigation Strategies: Develop and implement strategies to mitigate or reduce the identified risks. This may include implementing cybersecurity best practices, updating software regularly, enhancing employee training, and investing in security technologies.
  8. Incident Response Plan: Develop and regularly update an incident response plan. This plan should outline the steps to be taken in the event of a cybersecurity incident, including communication, containment, eradication, recovery, and lessons learned.
  9. Continuous Monitoring: Implement continuous monitoring of your IT environment to identify and address new threats and vulnerabilities as they emerge.
  10. Insurance Consideration: Explore cybersecurity insurance options to transfer some of the financial risk. Understand the coverage and ensure it aligns with your organization’s specific needs.
  11. Compliance: Ensure compliance with relevant regulations and standards in your industry. Compliance can help mitigate certain risks and may be a legal requirement.
  12. Employee Training: Educate and train employees on cybersecurity best practices to reduce the likelihood of human errors leading to security incidents.

Remember that cybersecurity is an ongoing process, and regular reviews and updates to your risk assessment are essential to adapt to the evolving threat landscape. Consider consulting with cybersecurity experts or using specialized tools to enhance the accuracy of your risk assessment.

 

Physical, human, and cyber security. Risk acceptance, risk avoidance, risk mitigation, risk transferral.

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