Cybersecurity Risk Management 101: How to Identify, Measure, and Mitigate Cyber Risk

Leaps in cloud-computing technology and global events like the COVID-19 pandemic have seen digital transformation explode in recent years, both incentivizing and forcing organizations to shift more and more of their operations into the digital realm.

But it’s impossible to enjoy the benefits of digital transformation without also encountering the myriad cybersecurity risks associated with it. Every time an employee connects their company-issued device to their home network while working remotely, each new software-as-a-service platform your organization uploads and downloads data to and from, and every digital communication received through any of the ever-increasing number of channels they’re being sent through can allow cyber risk to enter your organization and cause big problems.

Getting ahead of cyber risk and ensuring your organization’s data and assets remain secure as your digital operations grow requires sound, effective cybersecurity risk management programs. Let’s explore how to best identify, measure, and mitigate cybersecurity risk.

What is cybersecurity risk?

Cybersecurity risk, also referred to as cyber risk, is the potential exposure to loss or harm stemming from an organization’s information or communications systems. Cyber attacks, or data breaches, are two frequently reported examples of cyber risk. However, cybersecurity risk extends beyond damage and destruction of data or monetary loss and encompasses theft of intellectual property, productivity losses, and reputational harm.

How can cybersecurity risk impact an organization?

On average, cybersecurity incidents stemming from cyber risks cost organizations globally $4.3 million each. In the United States, that’s even higher, coming in at close to $10 million per incident, according to research from IBM. Cyber incidents quickly lead to lost revenue due to disruptions to productivity or operations, incident mitigation costs, and remediation expenses, legal fees, and fines.

Beyond the financial consequences of failing to manage cyber risk properly, organizations that experience data breaches or other adverse outcomes related to cybersecurity incidents take a hit to their reputation that can take years to repair and see customers head for the exits in droves.

What are some examples of cybersecurity risk?

Cyber risk can be faced by any organization and can come from within the organization (internal risk) or from external parties (external risk). Both internal and external risks can be malicious or unintentional.

Internal risks stem from the actions of employees inside the organization. An example of malicious, internal cyber risk would be systems sabotage or data theft by a disgruntled employee. An example of unintended, internal risk would be an employee who failed to install a security patch on out-of-date software or another who was duped by a phishing email.

External risks stem from outside the organization and its stakeholders. An external, malicious attack could be a data breach by a third party, a denial-of-service attack, or the installation of a virus. An unintentional, external attack usually stems from partners or third parties who are outside yet related to the organization —  a vendor that experiences a system outage, resulting in an operational disruption to your own organization.

Here are some of the most common examples of cybersecurity risk:

Data breaches, ransomware, and other cyber attacks

It seems a day doesn’t go by without reading about a major cybersecurity incident that led to hundreds of thousands — even millions — of people's personal data being compromised or stolen, either by nation-state actors or cyber criminals.

Data breaches and ransomware extortion are probably the most visible cybersecurity threats due to their prevalence and the value of an organization’s data. The data that organizations hold has become so valuable, in fact, that many of the other common cyber risks ladder up to this type of risk as their end goal.

Internet of Things

Did your office just install a fancy new Wifi-enabled coffee machine? There’s a chance it might be serving up a large cup of cybersecurity risk in addition to that piping-hot latte.

The proliferation of internet-connected devices, a trend known as the Internet of Things, has opened up organizations to significantly more cybersecurity risk than ever before. Every printer, smart speaker, camera, or other device that now has the ability to connect to your network represents a vector for bad actors to work their way inside.

Third-party and fourth-party cyber risk

No matter how impenetrable your organization’s cyber defenses are, they’re only as good as the weakest link in your supply chain or network of vendors. Bad actors accessing a larger organization’s networks through one of the third-parties they work with is one of the most common ways that data breaches occur. Examples of this include infamous data breaches at Target and SolarWinds.

Remote and distributed work models

The COVID-19 pandemic sent workers home in droves as authorities and private companies alike sought to stem the rising tide of infection by keeping people at a safe distance from each other. That trend, or some hybrid form of it, has held since, with more people working remotely than ever before.

This means many more people than has been historically typical are accessing work systems via unsecured or private networks, and with that comes a significantly higher amount of cyber risk.

Malicious insiders

No one knows a company’s systems better than the people who work in them or on them every day. That means that disgruntled workers, malicious contractors, or other people with privileged access to an organization’s systems and network and an ax to grind pose or other incentive to behave badly pose a real cybersecurity threat.

How to manage cybersecurity risk

So, how can organizations begin wrangling all of that cybersecurity risk? Here’s our six-step blueprint for building an effective cybersecurity risk management program:

Understand your cybersecurity risk landscape

Cybersecurity threats are diverse and growing in number and novelty each day. Your first steps in building a cybersecurity risk management strategy should be establishing a way to identify all of the cyber risks your organization is facing and building processes for continuously monitoring emerging cyber threats.

There are multiple ways to go about this:

• Identify all critical enterprise risks to determine the applications, systems, databases, and processes that could be affected. Consider the array of external and internal threats, from unintentional user error to third-party access to malicious attacks.
• Compile all of these cybersecurity risks into a master list, known as a cyber risk register, then map back to identify all of the events that would need to occur, in what order, for each risk to materialize. Centralize all of this information in a modern GRC platform to ensure you always have a holistic view of your cyber risk landscape, and automate the process where possible.
• Take stock of the data available to your organization to build key risk indicators for the cyber threats you consider most pressing, then set exceedance thresholds for each one that would trigger action.
• Interview both internal and external stakeholders and review government publications and media to flag emerging cybersecurity trends and add risks associated with them to your cyber risk register.

Assess and quantify your cybersecurity risks and cyber risk exposure

Next, you’ll want to prioritize which cybersecurity risks are the most dangerous for your organization and, thus, will need the most attention first.

• Quantify your cyber risks to determine the potential financial, operational, reputational, and compliance impact of a cyber risk incident. A risk scoring framework can help provide a more holistic ranking of threats, and modern GRC technology can help you conduct your analyses.
• Consider industry-specific risk standards and incorporate any specific compliance requirements into your cyber risk management practice.

Identify and implement mitigation measures and business continuity plans

With a clear understanding of the cybersecurity risks your organization faces and a hierarchy detailing the severity of each, you can now start developing and implementing plans for managing, mitigating, or responding to cyber risk.

• Determine the appropriate scale and plan of action for your organization. A distributed, cloud-based organization will have different needs from an organization that depends more heavily on physical assets. Consider how your company currently operates and how you envision it will operate in the future to ensure your risk management programs will accommodate and keep up with its evolving needs.
• Invest in modern GRC software and other cyber risk management tools to improve, automate, and streamline risk reporting and incident management requirements, workflows, ease of use, flexibility, business continuity and operational resiliency planning, and future expansion capability.
• Use the cyber risk register and cyber risk quantification results from the last step to communicate your cybersecurity needs to leadership to make it more likely you’ll obtain approval to carry your initiatives out.

When it comes to mitigating cybersecurity risk, there are numerous options, many of which should be used in conjunction with each other:

Organization-wide cybersecurity training and awareness programs

Cybersecurity risk management used to be viewed as solely the IT and cybersecurity teams’ job, but as cyber attacks grow more frequent and more sophisticated, staying on top of cyber risk is everyone’s responsibility. 

That’s why it’s important to develop and implement effective cybersecurity training programs, and conduct that training on a regular cadence. You should also conduct periodic testing, like phishing attack simulations, to gauge how effective your training programs have been.

Multi-factor authentication/zero-trust

Make sure your organization has methods for protecting access to your network and systems and routinely authenticating those who are already inside. Having organization-wide multi-factor authentication in place is crucial to restricting access to only approved parties, and implementing cybersecurity philosophies like zero-trust can add a deeper level of security to your systems.

Vulnerability testing

Conducting vulnerability testing as part of a vulnerability management program can help you understand where your organization is exposed to cyber risk, so you can fix those gaps. This testing should be performed on a regular basis to account for any new and novel cyber risks that you’ll inevitably face.

Cybersecurity insurance

Obtaining cybersecurity insurance is becoming an increasingly popular method of risk transference. Having a cyber insurance policy essentially shifts some or all of the burden for recovering from any cyber attacks or other IT-related incidents you might experience onto a third-party.

Cyber risk acceptance

If the consequences of a particular cyber risk are expected to be mild compared to the benefits of taking the risk, it might make sense to do nothing about mitigating that risk and simply accept that it might materialize. But, use cyber risk quantification to be absolutely sure that potential adverse effects of that risk are truly as trivial as you think they are.

Cyber risk avoidance

The flip side of cyber risk acceptance is cyber risk avoidance. This technique is exactly what it sounds like: You avoid taking any actions that would expose you to the cyber risk in question. The trade off here is that you also forego any of the opportunities or benefits that taking the risk may have offered.

Continuously monitor your cybersecurity risk

Cybersecurity risk is constantly evolving, and the assessments you performed last month, or even in the last few days, may already be obsolete to some extent. That’s why it’s crucial to the success of any cybersecurity risk management program that you put the right processes and technology in place to continuously scan the cyber risk horizon for emerging threats. And, cyber attacks aren’t the only types of cybersecurity risk that change like the wind: regulatory requirements, your vendors’ security and risk practices, and your own internal security processes and controls will also need to be evaluated on an ongoing basis.

Modern GRC platforms are great tools for automating monitoring tasks like collecting and centralizing data, carrying out third-party risk assessments, and tracking key risk indicators.

Reporting cybersecurity risks

When reporting the results and performance of your cyber risk management efforts, it’s all too easy to go overboard and try to loop your board and leadership in on all the minutiae and fine details. Resist this urge: It’s much more effective to provide clear, concise overviews of what’s working, what’s not, which risks are the most pressing, and what’s being done to address them. Getting into too much detail runs the risk of overwhelming leadership teams and reducing the likelihood that they’ll buy into and support your cyber risk management initiatives.

To that end, high-level visualizations, short lists, and hard financial numbers from your cyber risk quantification analyses — all preferably compiled into a constantly-updated dashboard in your GRC platform — are your friends here.

Building a culture of cyber risk awareness

Set and communicate an enterprise-wide IT and cyber risk management strategy, update it regularly, and make sure everyone engages with the information and materials on a regular basis to keep it fresh in their minds. Cyber risk exposure can occur in any division, making it an organizational priority, rather than just an IT priority. Everyone should be thinking like a cyber risk manager at all times.

Cyber risk management best practices

Centralize your cybersecurity risk data

Cyber risk is significantly harder to get a handle on if all the data you need to track it in a holistic manner is distributed throughout your systems or kept in a tangled mess of dense spreadsheets. Implementing a system for automating collection of and centralizing your risk data ensures you’ll have everything you need to identify, measure, mitigate, and monitor your cybersecurity risk at your fingertips, at all times.

Consider implementing a modern GRC platform, especially one built on a graph database, to make this easy.

Break down institutional silos

Cyber risk can strike anywhere, at any time. Keeping cybersecurity risk data and cybersecurity risk management operations siloed by department is a recipe for missing threats and courting disaster, or missing out on opportunities to take strategic cyber risks that will drive growth.

Give every department at least some level of access to your GRC system, so that they’ll be able to monitor and connect the dots between their own cyber risk and that of other departments.

Consider your third-party and vendor relationships

As noted earlier, no matter how airtight your cybersecurity risk management processes and programs are, it takes just one third- or fourth-party vendor or contractor to open a window into your organization’s network for threat actors to squirm through.

Make sure your third-party cyber risk management programs are just as robust as the ones you’re using to manage your organization’s own internal or external cybersecurity risk. Similarly, operate with an understanding that neglecting cybersecurity risk management in your own organization can lead to upstream problems for the organizations that count you as a vendor or partner.

How modern GRC technology can help manage cybersecurity risk

Cybersecurity risk is growing far too complex to be managed through traditional methods, tracked in clunky and easily-misplaced spreadsheets, or over email or direct messaging applications.

Modern GRC technology like LogicGate Risk Cloud allows you to connect, centralize, and quantify all of your cybersecurity risk data under one hood, then automate and streamline the tasks and processes necessary for effectively managing cyber risk. Schedule a demo today.