As you go about your daily life, consider this. Each time you make a decision, you’re taking on some kind of risk. Somewhere in the back of your mind, you’ll be working out what you can do to minimize that risk. It’s not so different with cyber security.
Managing risks of every kind is an essential part of running any organization. Cyber risk is no exception. Whether you’re a business owner, a project manager, or you’re planning a personal venture, the ability to identify and evaluate potential risks can make the difference between failure and success. That’s where risk assessment comes in.
What is Risk Assessment?
Risk assessment identifies, evaluates, and prioritizes risks so we can minimize their impact. Assessing potential threats and challenges helps organizations and individuals develop strategies for avoiding or mitigating them.
The goal of risk assessment is not to eliminate all risks. That would be ambitious! But what we can do is identify those risks, understand them thoroughly, and create a framework for managing them effectively. This allows for better decision-making, better resource allocation and, ultimately, greater resilience.
Four Steps to Risk Assessment
Risk assessment is typically broken down into a series of logical steps. While the specific framework may vary depending on the industry or context, the core process remains essentially the same:
- Identify the risk
- Assess its likelihood and potential impact
- Mitigate or manage
- Monitor and review
Identifying Risk
The first step is to recognize the risks that could impact your objectives. These could be internal or external, and they may stem from a variety of sources including:
Operational Risks
These include disruptions in processes, supply chain issues and equipment failures.
Financial Risks
Examples might include market fluctuations, cash flow problems or changes in regulations.
Legal and Compliance Risks
This includes risks relating to laws, regulations or contractual obligations.
Reputational Risks
For example, risks arising from PR disasters, negative media coverage or a breach of trust.
Natural Risks
This category includes events like earthquakes, windstorms, floods and fires.
Assessing Likelihood and Impact
Once you’ve identified all relevant risks, evaluate both their likelihood and potential impact. This allows organizations to prioritize which risks require the most immediate attention.
Mitigating or Managing Risk
The next step is to devise strategies for either mitigating or managing the risks you’ve identified. There are several approaches you can take:
Avoidance
Altering plans to avoid the risk altogether. For example, if you’re aware that a certain project component has a high chance of failing, you might decide to exclude it from the scope of the project.
Mitigation
Taking steps to reduce the severity of the risk. This might involve implementing new procedures, providing specific training for your staff or upgrading equipment to reduce the chances of failure.
Transfer
Shifting responsibility for the risk to another party, often by insurance or outsourcing. For example, a business might purchase insurance to cover the cost of potential property damage.
Acceptance
In some cases, the risk may be unavoidable, or the cost of mitigation may exceed its potential impact. In such cases, an organization might choose to accept the risk and plan for contingencies.
Monitoring and Reviewing Risk
Risk assessment is not a one-time process. As circumstances evolve, new risks may arise while others diminish. Continuously monitoring and reviewing risk is essential if you want to maintain an up-to-date understanding of your risk landscape. This can involve regular audits, risk reassessments, and feedback loops. All of these will help ensure that the strategies you have in place remain effective.
Risk assessment is a powerful tool for navigating uncertainty and safeguarding your organization against potential threats. By understanding and addressing risks ahead of time, organizations can make smarter decisions, allocate resources more effectively, and build resilience against unforeseen challenges. In commerce, healthcare, finance, or any other domain, risk assessment should be an ongoing process that underpins risk management and long-term success.
References
https://www.iso.org/iso-31000-risk-management.html
About Solis
Solis delivers best-in-class managed cyber security services and cyber incident response. Combining state-of-the-art technology with unparalleled cyber threat intelligence, our award-winning team of cybersecurity experts has more than 20 years of experience protecting SMBs and SMEs from potentially devastating cyber attacks.
With offices in the United States, United Kingdom and Australia, Solis handles thousands of cyber events each year and is trusted by customers in 90+ countries around the world. Learn more at www.solissecurity.com
