Ambitious information security experts serve as a critical part of cyber risk management.

The corporation is responsible for structuring IT and information security activities to protect its data resources, such as hardware, software, and procedures.

To stay competitive, enterprises must design and establish secure environments that retain confidentiality and privacy while also ensuring the integrity of corporate information. This can be achieved through the use of cyber risk management approaches.

This article explores the need for security and provides an overview of cyber risk assessment. We’ll discuss control categorization and approaches with an example.

Need for security

Organizations have long encountered various types of risk. Still, cyber risk has emerged as a critical component – evaluating risks to corporations, their information, and their financial results is a priority.

Malicious hackers are taking advantage of technological advancements and developments to hack and exploit the resources of businesses.

Cyber risk is the third critical corporate risk in 2021, as per the latest Allianz Risk Barometer.
Cybercrime costs approximately $600 billion per year, accounting for over 1% of global GDP, as per The Center for Strategic and International Studies (CSIS), and 300,562,519 people were affected by publicly disclosed security breaches the previous year, as per the Identity Theft Resource Center.

The following table shows some classifications that reflect realistic and prominent threats to a company’s personnel, data, and technology.

Each organization must prioritize the risks it confronts depending on the security scenario in which it works, its organizational risk approach, and the vulnerability levels at which its resources execute.

Cyber risk management

Risk management is the method of identifying vulnerabilities to a company’s data resources and architecture and implementing strategies to reduce that risk to tolerable levels.

The three primary steps of cyber risk management are:

Risk identification
Risk assessment
Risk control

Cyber risk assessment example

Let’s understand the stages of risk assessment with the help of an example.

For instance, your department head assigns you to perform risk management and shares the network architecture, employee lists, software list, etc., with you.

Risk identification

The first step of identification is to identify the assets, categorize, prioritize and store them in the inventory.

It is simple to identify numerous assets first by glancing at network architecture, but preserving them together in memory is difficult, so why not categorize the assets with the components of information security management.

Traditional Components

SecSDLC Components

Examples

People

Employees

Support Staff
Developers
Application Admin

Non-Employees

Stakeholders
Vendors
Operational users

Software, Hardware, Network

System Devices/Networking Components

Server
Firewall
IP
Utilities
Application Layer
Database
Routers

Procedure

Procedure

Network elements
Policies and Procedures
SLA
NDA
Reports

Data

Information

Data Owner
Size of Data
Backups
Who will manage the data?
Transmission
Processing

After identifying and categorizing assets, we need to create an inventory of all assets.

We must not prejudge the worth of every asset when compiling an inventory of data assets.
Whether automated or manual, the inventory approach needs significant planning.
It must also include the sensitivity and security level of each item in the inventory.

After inventory, we perform relative assessments to guarantee that we assign the most significant assets top priority. You can also ask several questions to allocate weight to assets for risk assessment. Questions, such as:

What resource is associated with the highest revenue margin?
Which of the assets is the costliest to replace or to safeguard?
Which asset’s removal or corruption might be the most distressing or expose you to the greatest risk?

After performing initial identification, we start an assessment of the risks affecting the company.

If you presume that every risk will indeed target every asset, the project scope suddenly grows so vast that planning becomes impossible.

We should assess each threat for its ability to put the company in jeopardy. This is threat assessment. Answering a few simple questions can help you start a threat assessment:

What threats pose the greatest hazard to a company’s assets?
How much will the attack cost if data recovery is required?
Which threats pose high risks to the data owned by a company?

Risk assessment

You may assess the comparative risk for each vulnerability now that you’ve identified the organization’s assets and threats. We refer to this as risk assessment. Now, identify the vulnerability associated with assets and threats.

Assets

Threats

Vulnerability

Server

Exploitation
System failure
Overheating in Room
Out of Electricity

Backdoors
Unauthorized Access
Open Ports
Old Cooling Devices (AC)

Websites

Malicious Payloads
DDOS
XSS

Policies & Procedures
Firewall
IDPS

Rogue Devices

Spoofing
MITM
Sniffing

Misconfiguration
Not updating devices

Each asset is given a risk level or grade during risk assessment. While this number has no exact value, it helps determine the relative risk associated with every sensitive asset.

There is also a basic formula we use to assess the risk.

Risk = likelihood of occurrence of vulnerability * value of the information asset – the percentage of risk mitigated by current controls + uncertainty of current knowledge of the vulnerability.

Let’s utilize this formula with an example.

We have an “asset A” with a value of 40 and one vulnerability with a probability of 1.0 with no security controls. Your facts are 80% credible*.

(If the reliability is 95%, the uncertainty is 5%.)

(40 × 1.0) – 0% + 5% = 45

So, the vulnerability of asset A ranks as 45.

You’ll most likely have listings of assets with information by the end of the risk assessment. The aim was to discover assets’ information with security flaws and create a compilation of them, graded from most vulnerable to least vulnerable.

You gathered and stored a plethora of facts about the assets, the risks they pose, and the risks they disclose while compiling this list and so on.

Risk control

After completing the risk identification, and risk assessment process, we end the risk management with risk control.

Risk control give us five strategies to deal with the risks, and they are:

Defend
Transfer
Mitigate
Accept
Terminate

Let’s see the below table to learn the control strategies in depth.

Risk Control Strategies

Definition

Examples

Defend

The defend strategy tries to eliminate the vulnerability from being exploited.

a cryptographic-based verification technique RADIUS

Transfer

Using the transfer control technique, we shift the risks to other resources, activities, or companies.

Rethink how services are working and offered.

Revising deployment models.

Rechecking outsources services.

Mitigate

With planning and response, the mitigation control technique seeks to lessen the effect of vulnerability exploitation.

Incident Response Plan (IR).

Disaster Recovery Plan (DRP).

Business Continuity Plan (BCP)

Accept

The accept control strategy is doing less to prevent a vulnerability from being exploited and accepting the result of such an attack.

Risk acceptance is related to the risk level and the threat value of the risk.

Is the risk risky enough to accept it and do nothing for a while?

Terminate

The company’s terminate control strategy encourages it to eliminate commercial operations that pose unmanageable risks.

Instead of applying risk controls, the organization terminates the activity/product, which brings risks.

Risk reporting

The very last step we have is risk reporting. It’s a crucial part of risk assessment. After performing the entire risk management process, you have to document it. Risk reports are a technique of informing those that need to know about the project and company’s risks.

Conclusion

In a nutshell, as you progress along the risk management process, you’ll have a greater understanding of your corporation’s architecture, your most important data, and how you can improve your management and security.

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