In an increasingly digital world, organizations are constantly facing dynamic threats that pose different levels of risk to their digital resources, employees and reputation. A breach of a company’s network could have far-reaching consequences including financial losses, unending lawsuits and permanent loss of reputation.
In 2013, Target, an online retail store in the US was compromised, with about 41 million customer payment details stolen. This breach had devastating effects on Target, with the firm ordered to pay $18.5 million in the settlement as well as $10,000 to each customer who could prove they had been compromised.
- But how can organizations identify risks?
- Is there a risk management process that organizations can follow to perform risk assessment?
- How can organizations conduct an evaluation of risk and further secure themselves?
What is an IT Security Risk?
A risk in IT security refers to the possibility for damage or loss incurred when a threat, for example, a hacker, exploits a weakness in the IT resources of an organization. Organizations can suffer a wide range of risks including financial losses as well as the loss of reputation if they’re compromised.
While cyber threats are dynamic and constantly changing, organizations need to be aware of different risk factors that increase the likelihood of their IT systems getting compromised. They also need to know what to do should a risk occur. This can be done via a risk management plan.
What is a Risk Management Plan?
A risk management plan is a document that outlines how risks in an organization or project shall be handled. This includes how the risks shall be identified and assessed, the parties that will carry out the process, as well as containment measures, should an identified risk occur. Project risk management is specifically used by project teams to identify and manage risks when carrying out projects.
A risk management process has 5 key steps:
- Risk identification
- Risk analysis
- Risk evaluation
- Risk treatment
- Risk monitoring and review.
The first step in the risk management process is the identification of risk. This encompasses all activities done to identify and describe risks that might occur during project implementation or to the organization at large. To effectively do this, identify all assets within the organization. IT resources might include servers, network devices and computers.
Now proceed to identify any potential threats these assets face as well as weaknesses they have that could be exploited by malicious parties to compromise them. A threat actor could be a former employee and a vulnerability could be a misconfigured server. A risk register, a tool for documenting risks along with actions to manage each risk, can be used to effectively identify and document risks.
What Next after Identifying Risks?
After identifying risks, the next step is to compute the probability of occurrence of the risks along with the consequences should the risk occur. This process is known as risk analysis. This step enables the risk manager to get a better understanding of both new and existing risks in the organization as well as how they affect the overall organization or project goals.
Project managers, in particular, should be aware of how the occurrence of identified risks will affect their project lifecycles; some risks could stall the project and therefore have to be properly managed for the project to be successful. This information should also be documented in the risk register.
Once risk analysis has been conducted, the next step is to carry out risk evaluation. Risk evaluation involves calculating the magnitude of risk drawing from the probability and consequences of the occurrence of the risk. Essentially, you want to determine if the impact of the risk is within tolerable levels or not.
A risk that is within tolerable levels can be accepted; otherwise, measures need to be enacted to minimize chances of occurrence of the risk. For instance, a power outage is likely to result in the unavailability of services and is therefore not within tolerable levels. Risk analysis provides vital information required for risk treatment and should be documented in the risk register as well.
The Importance of Risk Treatment
Risk treatment is one of the most important steps in the risk management process. This step involves devising a risk management strategy where you evaluate the top-ranked risks and come up with a plan to either treat them or alter them to be within tolerable levels. It is important to ask yourself how best you can reduce the probability of the risks occurring.
This is also the step where you come up with risk mitigation and contingency plans aimed at reducing the effects of the occurrence of identified risks.
For instance, you can implement data backup that would ensure your data is accessible in the event that a malicious user compromised your systems and encrypted your data. If you anticipate power outages, you can put in place power backup measures that will ensure continuity of services in the event of an outage.
It is important to determine the cost-effectiveness of your risk treatment plan to ensure it can be feasibly implemented within the organization.
Monitoring and Reviewing Risks
The final step in the risk management process is monitoring and review. Here, you use the risk register to keep track of risks and review them. This helps you to determine the risks that are occurring as well as the effectiveness of your risk treatment plan in remedying them. For instance, in case you have been experiencing power outages, you can review the effectiveness of the power backup measures in ensuring continuity of services before restoration of power.
Therefore, while the risk is all about uncertainty and can’t always be anticipated, identifying and managing risks is important in reducing risks and further securing organizations as well as ensuring project completion. Frameworks such as the ISO 31000 risk management framework can be used to facilitate this process.
It is important for technical teams to closely work with top management to ensure effective and efficient risk management strategies to further secure digital postures of their organizations as well as guarantee project completion.