With the emergence of new cybersecurity regulations like the SEC’s incident disclosure rules and the EU’s NIS2 Directive, much attention is directed towards understanding and complying with these new incident reporting requirements. However, underlying these regulations is a significant emphasis on organizations fully integrating cyber risk management into their operations. Understandably, this has resulted in a greater focus on cyber risk management and its current level of adoption in organizations.
What is Cyber Risk Management?
Cyber risk management is a comprehensive approach to safeguarding organizations against cyber threats that emphasizes cybersecurity as a responsibility of the entire organization—not just the security team. According to a Noetic-sponsored report by HardenStance, cyber risk management refers to ‘the use of business processes and technical controls to identify, rank, monitor and manage the risks that stem from an organization’s use of IT and OT systems and the Internet.’
It plays a vital role in safeguarding businesses that leverage digital technology for managing sensitive data and financial transactions, highlighting its importance in cyber asset management and adherence to standards like ISO 27001.
With the benefits of cyber risk management including protection from cyberattacks, cost savings by preventing data breaches, ensuring regulatory compliance, safeguarding the company’s reputation, and supporting business continuity, it becomes clear why adopting effective cyber risk management strategies is essential. This strategic approach not only aligns with cybersecurity best practices but also boosts confidence among stakeholders in the organization’s commitment to security.
Understanding Cyber Risks
Understanding the components of cyber risks is fundamental to effective cyber risk management. These components include:
- Threats: These can arise from various sources, such as hostile attacks, human errors, and natural disasters, each with the potential to exploit vulnerabilities.
- Vulnerabilities: These are weaknesses that can be found across information systems, security procedures, and even within supply chains or vendor relationships, making systems susceptible to attacks.
- Consequences: The adverse outcomes resulting from threats exploiting vulnerabilities, which often lead to the loss or destruction of information.
To quantify cybersecurity risk, businesses often rely on the formula:
Risk = Attack’s Impact x Attack’s Likelihood
This calculation underscores the importance of both understanding the potential impact of an attack and its likelihood, thereby facilitating a more nuanced approach to cyber risk management.
Cyber risks are not static; they evolve continuously, necessitating an equally dynamic cyber risk management program. This program should address risks from both external sources, like malware or third-party vendors with inadequate security measures, and internal sources, including employee sabotage or weak security practices. The ultimate goal of cyber risk management is not just to identify existing risks but to understand their potential impact comprehensively and develop strategies to mitigate or manage those risks effectively.
A Framework for Cyber Risk Management
A cyber risk management process is a structured approach that ensures organizations can identify, assess, prioritize, and respond to cyber risks effectively. This process is crucial for maintaining the integrity and security of an organization’s digital assets.
- Identifying Risks: This initial step involves a comprehensive understanding of the organization’s IT environment, including data, networks, systems, and third-party components. It’s about measuring the value and importance of different assets and understanding where breaches could potentially originate.
- Assessing and Analyzing Risks: After identifying risks, the next step is to assess their severity by evaluating the likelihood of occurrence and potential impact. This includes analyzing risks based on historical occurrences and determining the organization’s acceptable level of risk tolerance.
- Prioritizing and Responding to Risks:
- Prioritizing Risks: Utilizing a risk matrix, risks are prioritized to ensure that the most significant threats are addressed swiftly, based on their potential impact.
- Deciding on Risk Response Strategy: Organizations must decide on their appetite for risk, which could include treating, tolerating, terminating, or transferring the risk. This decision-making process involves considering various mitigation strategies to address the identified risks effectively and, as the HardenStance report concludes, the level of risk appetite needs to be formally documented and understood by the key stakeholders
- Monitoring and Reviewing: Continuous monitoring of risk and controls is essential. This involves regularly reviewing the cyber risk management activities and performance to ensure that controls are effective in mitigating risks. Organizations must also stay current on all cybersecurity risks by documenting all risks in a risk register and reviewing it regularly. As stated in the report, the use of cyber risk assessments is critical here to help to identify, estimate and prioritize risks.
- Continuous Improvement: Learning and improving based on the outcomes of the cyber risk management process is vital. Fostering a culture of continuous learning and improvement helps the organization stay ahead of potential cybersecurity threats.
Through these steps, organizations can develop a robust cyber risk management strategy that not only addresses current threats but also anticipates future vulnerabilities, ensuring a resilient and secure digital environment.
Good cyber risk assessments require high fidelity asset inventories.
A key finding from the HardenStance report sponsored by Noetic was that to properly understand and measure cyber risk, you must start with a single source of truth in the form of a cyber asset inventory. For this to be effective, it also needs to be a comprehensive view into not just compute devices, but also security policies, networking information, users, etc.
‘An asset inventory should therefore include the network’s topology or design; security policies; users’ specific access permission relationships to applications and whether they are Multi-Factor Authentication (MFA)-enabled; and any employee-owned devices that connect to the network. It should also be sure to incorporate any and all assets, whether deployed on-premises, in a data centre, or in the cloud.’ – HardenStance, Fundamentals of Cyber Risk Management, 2024
The cyber asset inventory should also be continuously updated to account for technical ‘drift’ as the security posture changes over time, so does the relevant threats, which is why we see newer regulations, such as CISA’s BOD 23-01 requiring federal agencies to scan for new assets at least every 7 days. This task is as integral as it is challenging, driving the need for automation across a range of tooling to identify new or changed assets across a dynamic digital environment.
Learn more about how to evolve your own cyber risk management program to meet the evolving threats and greater regulatory pressures. Download the full report sponsored by Noetic:
The Fundamentals of Cyber Risk Management
A HardenStance report
*** This is a Security Bloggers Network syndicated blog from Noetic: Cyber Asset Attack Surface & Controls Management authored by [email protected]. Read the original post at: https://noeticcyber.com/beginners-guide-cyber-risk-management/