What is a Security Risk Assessment?

A security risk assessment evaluates the information security risks posed by the applications and technologies an organization develops and uses.

An essential part of enterprise risk management is the cybersecurity risk assessment, explicitly identifying potential threats to information systems, devices, applications, and networks. A risk analysis is completed for each identified risk, and security controls are pinpointed to mitigate or eliminate these threats.

Security risk assessments are essential for cybersecurity and regulatory compliance. For example, the Sarbanes-Oxley Act (SOX) and the Health Information Portability and Accountability Act (HIPAA) require periodic security risk assessments.

What Are the Elements of Risk Assessment?

The National Institute of Standards and Technology’s (NIST) Special Publication 800-53, Guide for Conducting Risk Assessments, provides a framework for the risk assessment process. Unlike vulnerability assessments, which measure whether your IT system is vulnerable to specific, known threats, risk assessments consider elements beyond attack vectors and vulnerable assets.

Risk assessment models typically involve these elements:

Identification

Security risk assessments allow you to identify your organization’s critical technology assets and the sensitive data those devices create, store, or transmit. This information is crucial to developing risk management processes tailored to your company’s needs.

Risk Profile Creation

Risk profiles analyze the potential risks associated with individual assets, allowing you to determine the threat to your overall risk landscape. Risk profiles facilitate the creation of independent security requirements for physical or digital information assets and reduce security standards costs throughout the organization.

Critical Assets Map

Determining the workflow and communication process among critical assets helps you to focus on maintaining business operations during cyberattacks. In addition, understanding the communication, storage, and distribution of sensitive information facilitates the formulation of safeguards to prevent data breaches.

Assets Prioritization

With the number of security threats discovered every day, your company will inevitably suffer a cyberattack or data breach at some point. Prioritizing your assets so you know which ones to protect the most and to rescue and repair first facilitates the recovery of your business processes when an unexpected event occurs, such as a natural disaster or a cyberattack.

Mitigation Plan

Information gathered in your information security risk assessment will only protect your stakeholders if you use its findings to develop mitigation measures. IT infrastructure segmentation, backup policies, disaster recovery, and business continuity plans are mitigation strategies that use risk assessment reports to manage the impact of adverse events.

Vulnerability and Cybersecurity Risk Prevention

Evaluating the effect of remediation efforts on your security posture is critical. For example, access controls, advanced authentication methodologies, firewalls, vulnerability scanning, and penetration testing can protect high-risk infrastructure from cyber threats. So, test and measure the performance of those efforts to see whether they protect your IT assets as intended.

Monitoring

Even if you perform risk assessments regularly, some measures can passively monitor your network to identify threats and prevent security incidents. For example, antivirus scanners serve ongoing monitoring and facilitate information security management.

What is the Difference Between a Risk Assessment and a Vulnerability Assessment?

Risk and vulnerability assessments may seem similar initially, but they are different concepts. IT risks are potential threats or hazards to an organization’s technology, processes, and procedures. Vulnerabilities are known weaknesses in IT systems that can be exploited.

Risk assessments identify potential dangers connected to a new initiative or business endeavor. For example, you might find that your employees aren’t well-versed in noticing phishing emails or that the network isn’t segmented as narrowly as it could be. The goal is to locate knowledge gaps, close such gaps, and then take action to reduce potential threats.

In contrast, vulnerability assessments search for existing flaws in assets or systems that bad actors could use to their advantage and harm the environment. For example, you might find specific weaknesses in your Enterprise Resource Planning (ERP) software that has gone unpatched and need prompt attention.

How Do You Conduct Security Risk Assessments?

A security risk assessment should encompass all parts of a business, from IT to operations to human resources and accounting. That said, an evaluation is time-consuming and labor-intensive. These steps will guide you in performing a comprehensive assessment.

Asset Identification and Prioritization

Begin by compiling a comprehensive list of all assets to know what needs to be protected. Servers, client contact information, critical partner papers, trade secrets, and other items are all examples of assets. Next, gather the following information for each asset, where applicable:

• Software
• Hardware
• Data
• Information storage protection
• Physical security environment
• IT security policies
• Users
• Support personnel
• Technical security controls
• Mission or purpose
• Criticality
• Functional requirements
• Interfaces
• IT security architecture

You will likely have to limit the scope of the subsequent phases to mission-critical assets; otherwise, the process may become too overwhelming. However, this phase should be thorough because it defines which of your assets are mission-critical.

Consequently, you must establish criteria for calculating the value of each item. Common factors are the asset’s monetary worth, legal standing, and relevance to the company. Once management has accepted the criteria and formally included them in the risk assessment security policy, use them to classify each asset as critical, principal, or minor.

Threat Identification

A threat can be any event that damages your organizational assets or processes. It can be internal or external, malicious or accidental. Many threats are unique to your organization, while others are common to your entire industry. As a result, thorough screening for all potential threats is essential.

Vulnerability Identification

A vulnerability is a flaw that allows risk to disrupt your company. Analysis, audit reports, the NIST vulnerability database, vendor data, information Security Test and Evaluation (ST&E) methods, penetration testing, and automated vulnerability scanning technologies can all be used to identify vulnerabilities.

Don’t restrict your analysis to technical flaws; physical and human weaknesses exist. For example, placing your data room in the basement makes you more vulnerable to flooding. Additionally, failing to teach your staff about the dangers of phishing attacks makes you more susceptible to malware.

Controls Analysis

Next, analyze your controls: the measures to reduce or eliminate the likelihood that a threat will exploit a vulnerability. Technical controls include encryption, intrusion detection techniques, and identity and authentication solutions. Security policies, administrative measures, and physical and environmental processes are examples of non-technical controls.

Technical and non-technical controls alike can be either preventative or detective. Preventive controls try to anticipate and prevent problems from happening. Detective controls, including audits and intrusion detection systems, detect risks that have already happened or are still in progress.

Determination of Incident Likelihood

This phase evaluates the likelihood of a vulnerability being exploited. Factors to consider are the kind of vulnerability, the capacity and purpose of the threat source, and the existence of internal controls. Many companies use a scale of high, medium, or low risk (rather than a numerical score) to estimate the chance of an adverse event.

Impact Assessment

It is also necessary to assess the impact of these threats on your company’s operations if they materialize, along with potential ripple effects or collateral damage. This impact can be categorized as high, medium, or low.

Information Security Risks Prioritization

In this phase, the severity of each threat is determined according to its likelihood of occurrence and impact. The value calculation will provide a risk prioritization scale, allowing security teams to focus on those with the highest severity.

Recommendation of Measures

According to the severity scale, mitigation or prevention measures (such as internal controls) can be recommended to assure the best outcome based on cost-benefit, reliability, applicable regulations, effectiveness, reliability, and operational impact.

Assessment Report

Finally, create a risk assessment report to help your risk management team make the best decisions to protect your organization and its stakeholders. For each threat, you should visualize its corresponding vulnerability, assets at risk, impact, likelihood of occurrence, and recommendations.

Crafting Effective Risk Assessment Reports

A compelling, well-written risk assessment report is essential for informed decision-making. These reports are crucial for communicating potential threats, vulnerabilities, and mitigation strategies to key stakeholders. 

Risk management professionals, including risk analysts, managers, and compliance officers, typically write risk assessment reports.

Senior management, board members, stakeholders, and regulatory authorities are the primary readers of these reports. They rely on the information in the reports to make informed decisions, allocate resources effectively, and ensure compliance with industry standards and regulations, such as NIST SP (Special Publication) guidelines.

You should initiate reports when potential risks or significant changes occur within the organization or its environment. Quarterly or semi-annual reports are standard, but ad hoc reports may be necessary when critical risks emerge, or considerable events impact the organization’s risk profile.

Key Components

You should include several components to ensure that risk assessment reports are comprehensive and informative:

• Executive summary: A concise overview of the main findings, risk levels (e.g., low, moderate, high), and recommendations.
• Risk identification: A detailed description of the identified risks, their potential impact, and the likelihood of occurrence.
• Risk analysis: An in-depth evaluation of the identified risks, including their root causes, triggers, and potential consequences. This may involve both quantitative and qualitative methods.
• Risk mitigation strategies: Proposed actions to minimize or eliminate the identified risks, along with a timeline for implementation and responsible parties.
• Conclusion and next steps: This section summarizes the report’s key takeaways and provides a roadmap for future risk management activities.

Best Practices for Report Writing

To create effective risk assessment reports, consider the following best practices:

• Use clear, concise language and avoid jargon to ensure the report is accessible to all readers.
• Prioritize risks based on their potential impact and likelihood and focus on the most critical issues.
• Use visuals like charts to communicate complex information and trends, mainly when presenting quantitative risk assessment results.
• Provide actionable recommendations that align with the organization’s strategic objectives and risk appetite. 
• Collaborate with relevant stakeholders, including those from information technology and other departments, to gather input and ensure the report’s accuracy and relevance.

Which Industries Require Security Risk Assessments?

Any company that deals with sensitive data such as Personally Identifiable Information (PII) or Personal Health Information (PHI) should conduct security risk assessments. Some industries that require periodic risk assessments are:

Healthcare

The Health Insurance Portability and Accountability Act (HIPAA) requires all covered entities and business associates to conduct security risk assessments to identify threats and prevent data breaches. If a data breach is identified, an evaluation must be completed to determine the level of risk posed to individuals and communicate accordingly.

Payment Cards

According to requirement 12.2 of the Payment Card Industry Data Security Standard (PCI DSS), any business that processes or handles payment cards must perform a risk assessment annually and whenever substantial environmental changes occur.

Critical assets, threats, vulnerabilities, and the impact on the cardholder data environment must all be identified throughout the risk assessment process. A formal, documented risk analysis should emerge from the risk assessment.

Public Companies

These organizations must perform a Top-Down Risk Assessment (TDRA) to comply with the Sarbanes-Oxley Act. The TDRA aims to determine the effectiveness of the company’s internal controls. Depending on the company’s size, larger businesses might also need an external auditor’s review of controls.

Conduct Risk Assessments With ZenGRC

Nothing should be left to chance in a security risk assessment. Errors and omissions caused by manual procedures and untrained hands may be expensive and damaging to your company’s reputation.

Instead of using spreadsheets to manage your security and compliance requirements, adopt RiskOptics ZenGRC to streamline evidence and audit management for all your compliance frameworks.

ZenGRC is ready to assist you in managing the lifecycle of all your essential cybersecurity risk management frameworks, such as PCI, ISO, HIPAA, and others. Templates and control mapping simplify document management and reduce duplication of efforts across frameworks.

Schedule a free demo and get started on the road to worry-free risk management.