“The recent findings from the IBM Cost of a Data Breach report have shed light on the stark differences in costs across industries. Notably, the healthcare sector bears the brunt with an average cost of USD 10.10 million per data breach, while breaches in hospitality come with a comparatively lower price tag of USD 2.9 million. Let’s explore this blog post to discover cybersecurity risk management, its core components, how to significantly reduce data breaches, and more.”
Cyber risk management, or cybersecurity risk management, is crucial to protect information systems against digital and physical threats. It involves identifying, prioritizing, managing, and monitoring risks. In today’s technology-dependent world, companies face cyberattacks, employee errors, and other threats that can disrupt operations and lead to significant consequences such as revenue loss, data theft, and reputational damage.
While complete elimination of these risks is impossible, cyber risk management has become an integral part of overall enterprise risk management. Companies use this process to identify and understand their most significant threats, allowing them to choose appropriate security measures based on their business priorities, IT infrastructure, and available resources. By doing so, they aim to minimize the impact and likelihood of cybersecurity threats, protecting critical systems and mitigating potential financial and reputational losses.
The cybersecurity risk management process
Understanding and managing cyber risk is a tricky task, as companies often don’t have a complete view of cyber threats, vulnerabilities in their networks, or unpredictable factors like weather and employee mistakes. Moreover, the impact of the same cyberattack can vary among companies. For example, data breaches in healthcare can cost around USD 10.10 million on average, while in the hospitality sector, it’s around USD 2.9 million (according to the IBM Cost of a Data Breach report).
To tackle this, experts like the National Institute of Standards and Technology (NIST) recommend treating cyber risk management as an ongoing process, rather than a one-time event. Regularly revisiting this process allows companies to adapt to new information and changes in the emerging threat landscape and their own IT systems.
Companies can use many cybersecurity risk management methodologies, including the NIST Cybersecurity Framework (NIST CSF) and the NIST Risk Management Framework (NIST RMF). While these methods differ slightly, they all follow a similar set of core steps:
Step-1: Risk Framing
Risk framing is like setting the stage for making decisions about risks. Imagine it as deciding the rules of a game before you play. Companies do this to make sure that their plans for handling risks match up with their overall business goals. This way, they can avoid making mistakes that might cost a lot of money, like using security measures that mess up how the business works.
Step-2: Risk Assessment
Companies use cyber risk assessments to figure out what could go wrong with their computer systems and how bad it could be. They look at things like:
Threats: These are the bad things that can happen, like someone trying to mess up the computer system or trick people into giving away information. It could be a hacker or even mistakes made by employees.
Vulnerabilities: These are the weak points in the system that bad things could use to cause trouble. It could be a mistake in how things are set up or a bug that lets hackers take control.
Impacts: This is what the bad things could do to the company. It might cause the computer system to stop working, lose money, or have important information stolen.
Step-3: Responding to risk
When a company faces potential risks, it uses the results of a risk assessment to decide how to deal with them. If a risk is unlikely or has low impact, the company might just accept it, especially if investing in security measures is more expensive than the risk itself.
For risks that are more likely or have higher impacts, the company takes action:
Risk Mitigation: This means using security measures to make it harder for vulnerabilities to be exploited or to reduce the impact of exploitation. For example, putting an intrusion prevention system around important assets and having plans in place to respond quickly to threats.
Risk Remediation: This involves fully addressing a vulnerability so it can’t be exploited. This could include fixing a software bug or retiring a vulnerable asset.
Risk Transfer: If mitigation and remediation are not practical, the company may transfer the responsibility for the risk to another party. The common way to do this is by purchasing a cyber insurance policy.
The company watches over its new security measures to make sure they’re doing what they’re supposed to and following the rules. They also keep an eye on the bigger picture, like the different threats out there and their own computer systems. If anything changes—like new risks or addition of new IT assets—it could create problems. By always paying attention, the company can adjust its cybersecurity plan and how it deals with risks almost right away.
Why cyber risk management matters
As companies increasingly rely on technology for their day-to-day operations, their computer systems are getting bigger and more complicated. The use of cloud services, more people working remotely, and depending on third-party IT services bring more devices and software into a company’s network. As a company’s IT system grows, so does the risk of cyber attacks. Cyber risk management is a way for companies to keep track of and handle these risks, making their security better.
It’s not practical for a company to fix every vulnerability and defend against every threat. Cyber risk management helps by focusing on the most likely threats and vulnerabilities, so a company can protect what’s most important without spending too much on less important things.
Following cyber risk management also helps companies follow regulations like GDPR, HIPAA, PCI-DSS, and others. During the process, companies think about these rules when planning their security. The reports and data from monitoring can also help companies prove they did everything they could during audits or investigations after a cyber attack.
Some companies might have to use specific risk management frameworks. US federal agencies, for example, must follow NIST RMF and NIST CSF. Federal contractors might also need to follow these rules, as government contracts often use NIST standards to set cybersecurity requirements.