Cyber security risk 101: Introduction, frameworks and management

More than ever, organizations of all sizes are finding themselves under increasing pressure to mitigate and manage cyber risk. 

With cybercrime soaring and cyber incidents occurring with alarming regularity, executives are now calling the shots to make cyber security a boardroom issue.

However, there is still a lack of understanding about cyber security risks. Many organizations don't know or simply dismiss cyber security risk as an IT problem, but cyber risk underlines virtually every business and poses a substantial threat to organizations across all industry sectors.

Inside this read, we will take you through definitions, frameworks, impacts, and tips for effective management.

What is Cyber Security Risk?

The loss of sensitive data, disruption to service, probability of exposure, or reputational loss caused by a data breach or because of a cyber attack is known as Cyber Security Risk. It is extremely crucial for businesses across all industries to protect themselves from such continuous and evolving cyber crimes. 

It is important that organizations have a clear understanding of each cyber risk they are exposed to in order for them to formulate appropriate cyber security plans which will protect their online assets and keep their business data secure from cyber attackers.

Many organizations are embracing digital transformation and reliance on third and fourth-party vendors. But these adoptions come with risks, obviously.

So, it is crucial for any organization to understand the risk involved in such digital transformation projects and working with external vendors and systems.

According to the 2019 Future of Cyber Survey conducted by Deloitte, "Cyber risk refers to a problem that is the result at the intersection of business risk, regulation, and technology".  

3 Key Components of Cyber Security Risk

The three primary components that define cyber security risks are threats, vulnerabilities, and consequences. 

Threats include activities such as social engineering attacks or DDoS attacks. Cybercriminals are usually motivated by financial agendas, but there are other types of 'threat actors'  such as foreign intelligence services, hacktivists, and insiders.

Vulnerability refers to a flaw, weakness, or an error (in a cyber security context) that could be associated with systems, networks, tools, processes, etc. that when exploited results in a security breach. 

Consequence sometimes referred to as impact relates to the damage caused by an attack and is usually dependent on the sensitivity of the information lost or the criticality of the service disrupted. 

What is a Cyber Security Framework?

A Cyber Security Framework is a set of norms, principles, and best practices for dealing with risks in a digital environment. Companies that seek to comply with state, industry, and international cybersecurity standards are frequently required to use cyber security frameworks (or at the very least highly urged to do so). These frameworks are aimed at keeping your organization safe from threats.

The top-rated cyber security frameworks - such as the NIST Framework, ISO/IEC 27001, and CIS - practically dominate the market. But there are many others, especially if you're involved in critical infrastructure (e.g. AESCF, C2M2), financial services (e.g. APRA, ASIC), payment processing (i.e. PCI-DSS), or handling government information (e.g. ASD ISM, DSPF, VPDSS, FedRAMP, CMMC).

Below are three categories of frameworks and their purposes.

What is the Impact of Cyber Risk?

Cyber risk is an area that businesses are becoming increasingly more aware of.  Cyber risk and its impact is underpinned by a number of other business risks such as operational, financial, or compliance standards. Understanding cyber risk and how it impacts your business can allow you to protect yourself against cyber attacks, reduce the impact of cyber-attacks where they do occur, and manage the cyber security policy in line with regulations and industry best practice guidelines that you need to adhere to.

Depending on the type of attack, the impact could lie in a number of areas. From operational and reputational damage to financial loss and even penalization from a regulatory and compliance standpoint.

It is therefore essential that cyber risk management plans are in place to not just mitigate the ensuing cyber risks but also to map out an effective cyber response plan in case things do go awry.  A cyber response plan must also be ready for cyber-attacks that might involve financial fraud, data loss, and privacy violations. This will ensure that the steps taken by the relevant authorities promptly address the situation.

As a result, it is essential that organizations invest not only time but money into cyber security and cyber risk management solutions so as to give themselves the best chance possible to detect, respond and recover.

How to Manage Cyber Risk

Cyber risks run deep. We saw many successful attacks at the end of 2020 and the beginning of this year, including SolarWinds, Microsoft Exchange, and seemingly countless attacks on government departments and agencies as well as SMEs.

Some that you might not expect - such as the education sector - highlighted vulnerabilities when relying on third-party vendors (accountability can't be outsourced). Ransomware continues to dominate headlines, with an increase of approximately 400% from the first quarter of 2018 to the fourth quarter of 2021.  

Cyber security risk management involves the establishment of a cyber security policy and cyber-security program, cyber capabilities building, and assurance process to protect an organization from cyber risks. It encompasses various strategies like information security management, control activities, etc., which need to be incorporated on a regular basis to mitigate cyber threats for the development of secure products, services, and business processes altogether. Hence it is extremely crucial for organizations to adopt a proactive approach toward cyber security risk management through constant monitoring, prevention measures, and threat anticipation techniques.

The cost of business disruption due to cyber-attacks is ever-increasing with many organizations reporting losses reaching millions of dollars annually. Thus, if left unattended will lead to a loss of significant revenue and market share. Hence, cyber security risk management needs to be thought through from a strategic perspective as it directly impacts an organization's ability to function without threat.

Cyber security risk management also helps enhance reputation. By minimizing cyber risks, businesses can showcase their data protection assurance, compliance with regulations, and ability to maintain business continuity during (and after) a cyber security incident.

Conclusion

Cyber risk has the potential to disrupt and ruin every aspect of an organization.  Every business must have a cyber risk management plan in place to be well-prepared.

With new, more sophisticated threats emerging every day, managing your company's cyber risk is a never-ending challenge.

Here at 6clicks, we have a truckload of cyber risk-focused checklists, risks, controls, assessments, and playbooks inside our ever-growing content library. Inside the library, you will also find a huge selection of authority documents (standards, laws, regulations) so you can tighten your cyber compliance activities at the click of a button.

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All we want to do every day is make the world of GRC easier to manage. We can't do that without you, so we hope to hear from you soon!