What is a Risk Assessment?

A risk assessment is the process a company undertakes to catalog the potential threats to its business. In the same way a person might check the air pressure in a car’s tires every season, chief information security officers (CISO) should conduct risk assessments at regular intervals. Consider it a part of your standard safety management routines.

A cybersecurity risk assessment focuses on risks, both internal and external, related to your information systems, data, and sensitive information. The assessment also considers the controls that might be necessary to reduce each risk to acceptable levels.

Risk Assessment vs. Risk Analysis

People sometimes conflate risk assessment and risk analysis as the same thing — but in the cybersecurity world, your risk assessment is the entire process, while risk analysis is one step within it. Risk analysis is an important step, to be sure; but it’s still only one step in your more extensive risk assessment and management process.

What Is Risk Analysis?

Risk analysis is the stage of risk assessment in which you study each identified risk and assign a value to it based on one of two scoring systems: quantitative or qualitative. These values assist you in prioritizing your risks so that you know which ones to handle first and how to manage them effectively.

Quantitative scoring provides numerical values to the risk elements under consideration. For example:

• What would the cost be to the organization if the risk occurred? This is referred to as “Single Loss Expectancy” (SLE), typically quoted in dollar values.
• How frequently should you anticipate the danger to occur? Once per year results in an Annual Rate of Occurrence (ARO) of 1; once every 10 years results in an ARO of 0.1.

Then, multiply the SLE by the ARO to get the financial risk in a given year.

Qualitative scoring is more subjective. It typically employs a risk assessment matrix consisting of four factors:

• Likelihood. What is the probability that the danger will occur?
• Impact. What is the risk’s impact if the risk event occurs? How much damage would it cause to your project, function, or business?
• Velocity. How quickly will the impact be felt by your project, function, or enterprise?
• Materialization. What is the possible severity of the impact? (Add the impact and velocity scores and divide them by two to get this score.)

You can use controls and mitigation measures to minimize a risk’s potential impact, velocity, and severity ratings.

Why Are Risk Assessments Important?

A cyber risk assessment is essential for your company’s overall safety management because it illuminates all the potential digital hazards within the organization; you can then create a cyber risk management strategy that accounts for those threats before they pass. By being prepared with control measures, you keep your business, staff, and clientele as secure as possible.

What Are the Different Types of Risk Assessments?

The five main types of risk assessments are quantitative, qualitative, generic, site-specific, and dynamic. Each one uses data in various ways to perform a risk analysis.

Quantitative

A quantitative risk assessment uses data and numbers to measure risk. For example, this risk assessment may assign financial costs to the number of personal records compromised in a breach. It’s a simple way to communicate damage that executives can understand when discussing potential hazards.

Qualitative

In this method, you interview key stakeholders and decision-makers across your organization to ask how a breach or cyberattack would affect their day-to-day work. Then you can understand what information systems are crucial to which products and services your business provides to customers and prioritize which threats are most pressing (usually on a high-medium-low priority scale).

Generic

Generic risk assessments address typical dangers associated with a job or activity. The goal of generic risk assessment is to reduce duplication of labor and documentation.

This sort of risk assessment considers all of the dangers associated with an activity in a single evaluation. It is useful when the action is spread throughout many sections of the workplace or different places.

Site-Specific

As the name implies, a site-specific risk assessment is conducted for a specific location. It considers the site’s location, the environment, and the workers.

Your risk evaluation at the location might be qualitative or quantitative, or you might instead begin with a general risk assessment template. Either way, you should conclude with a site-specific risk assessment appropriate and sufficient for the situation.

Dynamic

A dynamic risk assessment analyzes risk in real-time. This sort of risk assessment is frequently used to deal with unknown hazards and ambiguity, and is commonly used by those who must cope with evolving and changing situations.

For example, emergency services or care professionals may apply dynamic risk assessments because the place, scenario, and individuals you interact with will vary from case to instance. As a result, you must continue to analyze risk in light of changing conditions.

How Often Should I Conduct a Risk Assessment?

The frequency of your risk assessments often depends on the legal requirements of your organization. For example, you may need to follow the Health Insurance Portability and Accountability Act (HIPAA) guidelines for risk assessment frequency if you work within the healthcare industry. You can also check with your industry leaders and auditors.

Beyond any industry-specific requirements, consider performing risk assessments at fixed intervals — say, once a year or every two years. It’s also wise to conduct risk assessments after significant corporate events such as a merger, a major systems integration, or even substantial operational changes (such as sending employees to work remotely during a pandemic).

What Common Risks Should Businesses Look For?

Be on the lookout for common cybersecurity risks such as malware, ransomware, phishing, and SQL injection — all external cyberattacks compromising sensitive data within your organization. 
Internal hazards can include:

• Poor network configurations
• Weak patch management
• Sloppy user access controls
• Weak employee training

What are the Four Key Steps of Risk Assessment?

If you’re unsure how to perform a risk assessment, fear not. NIST, the National Institute for Standards & Technology, has numerous risk assessment templates that can help. You can also generate an internal version of a risk assessment form that you can adapt over time.
The risk assessment process can be explained in four steps, based on the NIST “Special Publication 800-30: Guide for Conducting Risk Assessments” document.

Preparing the Assessment

This initial stage is critical to the success of your risk assessment, consequently your comprehensive risk management program. Preparation is highly affected and formed by the risk management framing stage.

To prepare for a full-fledged risk assessment, you must first:

• Determine the aim of the assessment
• Determine the assessment’s scope
• Determine which assumptions and limitations will be used
• Determine information sources (inputs)
• Determine the risk model and analytic technique used

You’ll set yourself up for a successful implementation by knowing precisely what you’re learning, why you’re studying it, and how.

Conduct Assessment

This is a crucial phase in the risk assessment process since it involves putting your strategy into action. The evaluation consists of two significant sub-processes: further identification and data analysis:

• Identification. This entails defining what specific risks exist, where they come from, and what potential events may occur due to exploited vulnerabilities.
• Determination. Once the threats have been discovered, you must evaluate all possible dire consequences for all parties involved and the relative chance of each such scenario.

When all this information has been gathered, it is time to put it to use.

Share Assessment Findings

In this stage, compile the assessment’s information and convey it to all stakeholders affected by the risks and scenarios.
This stage is less complicated than the previous two. It is nearly the same for all businesses that do it, except that significant variances in the breadth and scale of the firm and the risk assessment are reflected in how this stage operates.

Maintain Assessment

The final step in the NIST risk assessment methodology is to prepare oneself for continual, long-term evaluation. This step includes carefully monitoring previously recognized risk variables and screening for new ones.

Furthermore, you must regularly adapt your communication and risk management strategies in response to discoveries.

Finally, the evaluation must be something more than a one-time occurrence. Instead, it should be a part of your company’s broader culture.

ZenRisk Helps Businesses with Cyber Risk Management

Reciprocity’s ZenRisk can help you create a seamless risk assessment process for the long term by monitoring your data and finding cybersecurity and compliance gaps.

The integrated dashboard experience allows you to continue your risk management activities, storing all documentation in one repository for easy sharing, whether you need a full report or more simple data sheets for distribution.

Schedule a demo with our team today to learn more.