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Conducting a cyber risk assessment: a comprehensive guide

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Keeping an organization protected from security incidents is as tricky as it sounds. As organizations fortify their IT infrastructure against attacks, threat actors use more sophisticated methods to spot and exploit vulnerabilities.

According to Verizon’s 2023 Data Breach Investigations Report, social engineering attacks have doubled and interactive intrusion campaigns increased by 60%—all in the past year. And with the average breakout time for intrusion activity being reduced to 62 minutes in 2023, you have even less time to respond following an attack before your systems get compromised.

While tempting, no organization can afford to raise defenses against every threat — actual or perceived. To manage and mitigate risks in ways that maximize ROI and ensure business continuity, you need to do a cyber risk assessment.

This guide discusses cyber risk assessment, its importance, and the key steps to running an effective risk management campaign.

What is a cyber risk?

A cyber risk is the likelihood that your organization will be harmed by threats, attacks, and vulnerabilities targeting its systems, assets, and networks.

As businesses become more interconnected and reliant on digital infrastructure, the risks we potentially face have diversified over the years.

These event risks include:

  • Phishing
  • Malware
  • Ransomware
  • Insider threats
  • Denial-of-Service (DoS) attacks
  • IoT-based attacks

However, not all risks are created equal. Some risks are more damaging than others. And like every organization with limited resources, you can’t account for all risks.

No organization is entirely immune to a potential cyberattack or security event. Even so, your business can become resilient in the face of emerging threats by effectively managing these risks.

But how do you create a strong foundation for managing risks in ways most beneficial to your organization?

That’s where cyber risk assessment comes in.

What is a cyber risk assessment?

A cyber risk assessment is the process of identifying, analyzing, and evaluating potential cybersecurity risks in an organization’s digital landscape.

As mentioned earlier, not all risks are created equal. What’s more, each organization navigates a unique risk landscape. Is it any wonder most organizations find it challenging to find a consensus on which threats are more damaging or likely to happen?

You need to systematically manage these risks and make your organization more resilient to cyberattacks.

This means actively involving IT and business leaders in gathering insights about the company’s security posture and identifying critical assets or functions necessary to achieve business objectives.

Once you’ve done that, you can better understand the risk landscape. This, in turn, gives you a solid foundation for developing tailored security and risk mitigation measures that help you navigate that landscape better.

What are the different methods for cyber risk assessment?

There’s no one-size-fits-all solution to risk assessment. To make your organization resilient to risks, you must adopt an approach that suits your organization’s unique goals, security needs, and budget.

Understanding the different methods other organizations use may provide insights into the cyber risk assessment strategy that works for your organization.

Compliance-driven approach

A compliance-driven approach focuses on meeting the requirements set by regulatory bodies, including NIST, ISO/IEC, the Payment Card Industry Security Standards Council, and the European Union.

Adhering to established standards and guidelines earns the trust of your audience and creates a culture of trust with stakeholders and partners. It also reduces the likelihood of incurring legal penalties cost-effectively.

With that done, you can audit your security environment and check whether it adheres to the security controls within the relevant regulatory framework.

The disadvantage of the compliance-driven approach is that it creates a checklist mentality. When checking items off a list, you don’t account for your business’s unique needs and requirements or address threats and vulnerabilities unique to your organization.

That said, a compliance-driven approach makes sense as a starting point. Once you get compliance out of the way, you can implement security measures and controls that address your unique risk environment.

Asset-focused approach

An asset-focused approach to cyber risk assessment focuses on protecting specific digital assets and systems critical to an organization’s operations and objectives. By assessing risks on an asset level, your organization can safeguard your most valuable assets from cyber threats.

Those who use this approach start by defining the different categories of their assets and then fortifying security controls for each category of assets. These categories may include network infrastructure, data repositories, intellectual property, customer information databases, and operational technology systems. As an organization, you can start with your most important assets and then iterate from there.

One major disadvantage of using an asset-based approach is its inefficiency. For one thing, asset custodians have different ways of handling a single asset. It also encourages compartmentalization, which ignores the interconnectedness of various assets supporting the organization’s objectives.

Function-focused approach

The function-focused approach is the opposite of the asset-focused approach. Instead of focusing on critical assets, an organization focuses on the critical processes and functions an organization performs. This approach is best for organizations where infrastructure continuity is more important than the assets themselves.

It can be argued that a dichotomy between assets and functions is not necessary. But then again, a function-focused approach can have a profound impact on organizations whose operational effectiveness hinges on how assets interact and support one another. 

Function over form, as they say.

Attack Route Mapping (ARM)

Attack route mapping is an approach where you understand and visualize how an attacker can gain unauthorized access to your system, network, and assets.

In other words, you probe threats and vulnerabilities by thinking like an attacker. By using an adversarial mindset in assessing threats, you gain more realistic insights into how actual attackers exploit vulnerabilities in your defenses In the process, you learn how to secure your assets against threats that are most likely to happen, depending on the context.

To perform attack route mapping, your assessment team can create an attack graph to better visualize real-time risk across systems and networks. The graph should represent the pathways an attacker takes to reach your high-value assets. This visualization allows you to see the vulnerabilities existing within your system.

It also illustrates the multiple routes your attacker could take to access your digital assets. Through visualization, you can better understand how an attacker operates and the methods they are likely to adopt.

How to perform a cyber risk assessment in 8 steps

Conducting a cyber risk assessment is an ongoing, iterative process, but it can be broken down into eight steps.

Step 1: Determine your organization’s security posture

First, you need to understand your organization’s security posture. Then, you can make informed decisions about implementing your risk management strategy.

After all, assessing your organization’s ability to prevent, detect, and mitigate security events gives you a high-level view of your risk environment. Before you navigate the threat landscape, you need to know the terrain.

Risk assessment can be subjective at times. To get a more accurate estimate of each event risk in terms of likelihood and impact, get input from various sources.

Your primary source of information is the people within your organization, especially your IT and business managers and stakeholders.

When asking for input from your IT and business managers, get information about the following:

  • Existing security policies and procedures
  • Business objectives and goals
  • Regulatory and compliance requirements, processes, and controls
  • Key assets (both physical and digital)
  • Critical business processes and functions
  • Network infrastructure, including hardware, software, and cloud services
  • Ability to contain and recover from security events

You can gather the above information through interviews, questionnaires, and workshops.

Regardless of the method you use, make sure to document your findings. Remember, the idea is to get a broad view of your security posture, so don’t get over-detailed (that will come later).

Simply create a document or report outlining your key findings. If you can use visual aids to illustrate those key points, then by all means use charts, diagrams, or infographics. Lastly, prepare an executive summary that provides a brief overview of your organization’s security posture.

Step 2: Understand your compliance requirements

Staying on top of regulatory compliance requirements is a challenge in itself. If you don’t clarify what regulations apply to your business, they can become a distraction to risk management efforts.

To avoid the “compliance trap,” determine which compliance regulations and laws apply to your industry. For example, if your organization handles health information, you must comply with HIPAA regulations. If you provide essential to society or the economy, you’re required to meet NIS2 compliance requirements.

But don’t stop there. Review your company’s operations and processes to pinpoint areas where compliance could be improved. After spotting these compliance gaps, establish policies and procedures that outline how your organization can comply with all relevant requirements and regulations.

Lastly, communicate these policies and procedures to all departments and provide ongoing training to ensure compliance is maintained.

Ensuring compliance can be difficult when you have to sift through a lot of information. Thankfully,there are compliance solutions that can streamline the process. For example, NetApp’s  compliance & government solutions can help automate tasks such as regulatory tracking, policy management, and compliance reporting.

Step 3: Create an asset inventory

Once you’ve gained a holistic understanding of your security posture and taken stock of your compliance requirements, the next step is to create an asset inventory.

Creating a comprehensive list of all hardware, software, applications, and dependencies within your organization’s IT environment gives your security assessment team a “single source of truth” to work with.

An asset inventory gives you the visibility you need to navigate your assets, allowing you to look into each asset in terms of type, importance, dependencies, and potential risks.

For your “single source of truth” to be effective at guiding your cyber risk assessment efforts, ask these questions:

  • What hardware assets does your organization possess (e.g, servers. monitors, routers)?
  • What software assets are installed on your devices, including licenses, operating systems, and applications?
  • What are the configurations and specifications of each hardware assets (e.g., serial numbers, work settings, model numbers)?
  • What virtual assets and cloud-based resources are you using? What are they and how do you access them?
  • What data assets does the organization store, process, or transmit, including sensitive or critical information?
  • Who are the owners or custodians of each asset? What are their roles and responsibilities as asset custodians?
  • What dependencies exist between different assets, such as network connections, software dependencies, or data dependencies?
  • What is the current status and condition of each asset, including any maintenance or upgrade requirements?

If you want to go manual, create a spreadsheet or database that records all assets. You can use NIST’s free software inventory template to help get you started.

Or — you can go automated and let software tools gather data on your network and devices.

You can automate asset discovery using two methods:

  • Active scanning: This method works by using specialized scanning tools to send packets of “test traffic” to map out existing hardware devices and applications in a network. While this method can be intrusive to normal operations (not to mention expensive), active scanning is more accurate because it provides real-time data on the state of your devices and apps at the time of the scan.
  • Passive scanning: This technique also uses scanning software to gather information from a network or target system without actively interacting with its endpoints. Unlike active scanning, passive scanning doesn’t send out packets to probe a network. Instead, it only identifies and gathers readily available information. Passive scanning is cheaper, but it can take longer and can be prone to inaccuracies. 

Regardless of your preference, the resulting inventory should include columns for crucial information such as asset name, description, location, owner, criticality, and other vital categorizations.

Note that your organization’s asset inventory is a living document. You must regularly update it as your organization acquires new assets and discards outdated or redundant resources.

Step 4: Identify threats

With policies to guide your risk assessment efforts and an asset inventory that serves as a reference, you now have the foundation to identify threats and vulnerabilities in your IT infrastructure.

Before you proceed, it helps to know the types of threats your organization can get exposed to.

Threats come in different forms, including:

  • Hackers (e.g., phishing attacks, DDoS attacks, Zero-day exploits)
  • Insiders (e.g., employees using privileges to steal data, sabotage systems, and disrupt operations)
  • Technological failures (e.g., software bugs, hardware failures)
  • Human error (e.g., misconfiguration, failure to update software, clicking on malicious links)

To ensure you’re on top of relevant threats, consider the different types of threats to your organization and create categories for them. These categories have a lot of overlap, but they still provide a consistent framework for analyzing and prioritizing risks.

You can categorize threats as:

  • Strategic: These are data breaches carried out with the aim of gaining a competitive advantage (e.g., intellectual property theft, zero-day exploits, disinformation attacks).
  • Operational: These are threats that disrupt operations, resulting in penalties, delays, and reputational damage.(e.g., ransomware, malware, DDoS attacks)
  • Financial: These are threats that lead to financial loss.
  • External: These are threats that come from uncontrolled sources (e.g., state-sponsored cyber warfare, regulatory changes, and hackers. 

Due to the diverse nature of threats, you must do more than gather input from your IT and business leaders. Do interactive sessions, such as workshops and focus groups, to encourage brainstorming, ideation, and consensus building, which can generate more nuanced and holistic insights into the organization’s unique threat landscape.

Don’t get siloed in your own space. Get information on existing and emerging cyber threats from authoritative cyber threat information sources like:

Step 5: Pinpoint vulnerabilities

Once you’ve documented relevant threats, your assessment team must identify vulnerabilities and map how and why attackers can exploit security systems and gain access to your organization’s assets and data.

Performing a vulnerability assessment helps you identify gaps in your security controls.

These gaps in your security posture include:

  • Security flaws in apps and software
  • Misconfigurations
  • Weak passwords
  • Susceptibilities to human error
  • Third-party risk
  • Unpatched servers and software

There are many different methods to identify vulnerabilities, including:

  • Interviews with IT leaders, asset custodians, and support staff: Gather insights from key personnel to identify vulnerabilities and their context within the IT infrastructure.
  • Penetration testing: Also called “pen testing,” this method involves simulating real-world attacks to spot vulnerabilities and assess the effectiveness of current security measures.
  • Social engineering simulations: These involve creating scenarios in which individuals within the organization are tested for their susceptibility to manipulation and deceit.
  • Attack path mapping: You can do APM to create a visual map that shows potential routes attackers take to infiltrate your organization’s security defenses.

Step 6: Identify the consequences

Next, you need to identify the consequences if likely attacks exploit the vulnerabilities in your systems and networks.

It would help if you accounted for all types of consequences depending on your industry and business model, such as:

  • Financial losses
  • Operational disruptions
  • Reputational damage
  • Intellectual property loss
  • Regulatory fines
  • Decrease in market share
  • Loss of investor confidence

Don’t just list the consequences of every security event. Take the time to outline how each potential threat exploits vulnerabilities and the consequences the attack could have on your operations.

Here’s an example of a scenario:

Threat: A phishing email campaign successfully targets employees.

Vulnerability/asset: Lack of employee awareness training.

Consequence: Attackers gain access to sensitive internal systems, causing operational disruptions and reputational damage.

By playing out the scenario for each potential security event, you gain a better understanding of your organization’s risks. Moreover, these scenarios clarify the security measures you must take to prevent or mitigate these consequences.

Step 7: Quantify risks

As mentioned earlier, an organization can’t account for all threats, especially in the face of an evolving risk landscape. At the end of the day, operational resilience is ultimately about determining which risks to accept, mitigate, or transfer.

But before you get to that point, you must establish consistent and scalable parameters for prioritizing each risk event.

To determine which risks to prioritize or defer, it helps to put a numerical value on each risk.

The mathematical formula for calculating risk is expressed as:

Risk Score=Likelihood×Impact

For clarity, let’s define each variable:

  • Risk score: The numerical value that represents the overall risk level of a particular risk event
  • Likelihood: the probability of a specific risk event occurring.
  • Impact: the extent of the potential harm or damage that could result from that event.

To calculate risk scores that help you navigate your risk environment effectively, you must establish consistent parameters for measurement. It helps to put a number on things, but you may end up prioritizing risks that deserve less attention if your numerical values or descriptors don’t scale correctly.

For example, if you label a risk event as “moderately likely” to occur, you can assign a numerical value between 25% and 50% (meaning it has a 25% to 50% chance of occurring). If another risk event is “highly likely” to happen, then you might assign it a higher numerical value, such as 61% to 75%. 

Likelihood:

Highly Unlikely: 0%-10%

Unlikely: 11%-25%

Possible: 26%-50%

Likely: 51%-75%

Highly Likely: 76%-100%

Impact:

1: Insignificant

2: Minor

3: Moderate

4: Major

5: Catastrophic

Assessing and managing risks becomes more intuitive if you have a visual representation of the risk landscape your organization is navigating. This is where a risk assessment matrix can help.

To create a risk matrix, you plot each identified risk event onto the matrix based on its assessed likelihood and impact.

This visual representation allows you to quickly identify high-risk areas that require immediate attention and lower-risk areas that can be addressed with less urgency.

Step 7: Implement security controls

Now that you understand the threats you’re facing, it’s time to implement security measures to protect your organization.

Key security controls include:

  • Update security patches. Carry out regular patch management procedures to ensure all software and systems are up-to-date with the latest security patches and bug fixes.
  • “Harden” your security posture: Close security gaps in your attack surface by implementing multi-factor authentication, role-based access controls to minimize the risk of unauthorized access.
  • Conduct employee training and awareness: Over 90% of security incidents involve human error. You can prevent most breaches by increasing cybersecurity awareness about common threats, phishing scams, and best practices for data protection.
  • Develop an Incident Response Plan: Create a formal Incident Response Plan that outlines a clear, systematic process everyone can follow when a security event occurs. The SANS Institute recommends a six-step plan for carrying out an effective incident response.
  • Comply with legal and regulatory requirements: Monitor and check if your security controls and measures comply with relevant legal and regulatory requirements.

When implementing these security measures, focus on addressing the most likely and harmful threats to your business that lack sufficient security measures. Remember, one of the main goals of a cyber risk assessment is to help you allocate your resources to maximize the protection of your company’s assets and data.

Step 8: Continue monitoring and adapting

Always remember that cyber risk assessment is an ongoing process. You don’t just complete the steps outlined in this article and stop.

The threats you face today might not be the threats you face tomorrow. To stay protected, you must constantly monitor your systems for signs of unusual activity. Stay on top of emerging threats and vulnerabilities and update your security controls accordingly.

Conduct cyber risk assessment in iterative cycles rather than as a one-time event to build resilience against threats over time. By implementing in cycles, you can keep your defenses up against evolving threats while improving the maturity of your security posture..

In addition, make sure each assessment cycle is informed by changes to the risk environment including:

  • New technologies or systems
  • New threats
  • Regulatory updates
  • Industry trends
  • Recent cybersecurity incidents
  • Changes in business processes or objectives

Improve your cybersecurity with Proact!

Looking to fortify your defenses against an evolving cyber threat landscape? Our team of specialists at Proact can help.

First, we sit down and talk so we can better understand your organization’s cybersecurity needs.

Next, we team up with your in-house IT team to align your cybersecurity goals to align with your business objectives. Our team of specialists will develop a comprehensive security strategy that will secure your mission-critical data for years to come. From 24/7 monitoring and rapid incident response to disaster recovery and resilience solutions, we have you covered every step of the way. 

As your trusted cybersecurity partner, we implement security measures needed to keep your organization secure and resilient against cyber threats — even through the ebbs and flows of the threat landscape. Lastly, we can help you stay compliant with NIS2 by providing tailored solutions and proactive guidance to meet the requirements outlined in the directive.

Eager to learn more? Contact us today for a free consultation. We’d love to hear from you!

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