How to Do a Cybersecurity Risk Assessment the Right Way

Cyberattacks are rising exponentially, with a new breach in the news almost every week. As an experienced cybersecurity professional, I often get asked by clients and friends about how to evaluate if their organization is at risk.

This is why performing a cybersecurity risk assessment is so important. By identifying your critical assets, the threats that can impact them, potential vulnerabilities that could be exploited and ultimately quantifying the risks, you can determine the security controls needed to protect what matters most.

In this comprehensive guide, I will walk you through the key aspects of conducting a cyber risk assessment, so your organization can make strategic decisions to defend against threats.

Why Do a Cyber Risk Assessment?

Recent surveys show that a business falls victim to a ransomware attack or experiences a data breach every 14 seconds! Added to this is the cost of downtimes, notification overheads, legal implications and reputational damages.

According to IBM‘s 2022 report, the average data breach now costs a company $4.35 million. For healthcare organizations, this figure goes up to a whopping $10 million!

This is why being proactive with a risk assessment is invaluable. Strategically targeting security efforts by systematically evaluating assets, threats and controls pays huge dividends. Typical goals include:

Identifying Crown Jewels: Pinpointing mission-critical assets and sensitive data that require maximum protection.

Rating Risks: Estimating likelihood, impact and overall risk levels based on vulnerabilities and threat profiles.

Enabling Decision Making: Rationalizing security investments by focusing on highest risk areas first.

Supporting Compliance: Demonstrating a sound cybersecurity program as per legal and regulatory mandates.

Promoting Adaptability: Facilitating quick responses as business needs and technologies evolve.

Illustrating Due Diligence: Reducing liability and avoiding negligence penalties after an incident.

Now let me walk you through the step-by-step process followed by leading organizations to accomplish these goals.

Steps to Follow for Cyber Risk Assessment

Step 1 – Catalog Critical Assets

The first step is developing an inventory of critical assets. Document infrastructure like servers, endpoints, network devices, security tools etc. along with software platforms and applications supporting key functions.

Critical data such as customer credentials, financial information, intellectual property, employee records etc. should also be identified based on confidentiality and sensitivity.

Facilities, suppliers and other third-parties directly tied to operations must be considered as they expand exposure.missed something here

Step 2 – Identify Threats

With assets catalogued, next examine probable threats from both external and internal actors.

External threats consist of hackers, organized cybercrime groups, hacktivists, nation-states etc. targeting systems via techniques like phishing, ransomware, brute-force attacks, exploitation of vulnerabilities etc. Insider threats emanate from employees, vendors or others with access misusing privileges or inadvertently exposing data.

Then we have hybrid supply chain threats – where external threat actors compromise vendors/partners to penetrate target networks. Attacks against SolarWinds, Kaseya, Codecov that breached numerous global companies highlight this rising risk.

Identify relevant threats based on sector, geographic presence and technologies used. Prioritize threats that can significantly impact identified assets. For example, ransomware may be a priority threat for a healthcare company to prevent disruption of services, while hackers pilfering IP may be the chief concern for a tech firm.

Step 3 – Recognize Vulnerabilities

With threats determined, analyze if there are any technical, policy or process vulnerabilities that could be leveraged by attackers. Assess both infrastructure as well as people weaknesses.

On the technology side, check for unpatched systems, open ports, unencrypted data flows, poor access controls etc. Scans, penetration tests and audits can uncover many such deficiencies.

Evaluate security practices around awareness, configuration controls, incident response etc. as process gaps also heighten risk. For instance, inadequate vetting of vendor accesses or poor BYOD policies.

Map relevant vulnerabilities to critical assets-threat pairs for the next step on risk analysis.

Step 4 – Analyze Overall Risk

With an understanding of threats, vulnerabilities and potential impacts known, we can evaluate overall risk levels using this standard formula:

Risk = Threat Likelihood x Vulnerability x Business Impact

Here, likelihood refers to probability of a threat scenario materializing based on asset exposures and attacker motivations. Vulnerability is the ease of exploitation and business impact means financial, operational, reputational consequences.

Qualitatively, this gives risk ratings like Low, Moderate or High for instance. Quantitatively, numerical scores can be calculated based on defined scales to give overall scores.

For example, a likely ransomware attack (0.8 likelihood) exploiting an unpatched server (0.9 vulnerability) that hosts sensitive IP worth $10 million has an overall Risk Rating of 0.8 x 0.9 x 10 = $7.2 million

Such analysis provides data-driven insights into priorities for security efforts based on risk appetite.

Step 5 – Identify Risk Management Strategies

For risks deemed unacceptable as per ratings, target controls across technology, policies and processes need to be defined- such as:

Technology Security Controls: Firewalls, intrusion systems, sandboxing, encryption, multifactor authentication (MFA), backups, access management platforms etc.

Formal Security Policies: Incident response plans, access control policies, BYOD policies, password policies, employee training etc.

Improved Practices: Regular patching/configuration hardening, secure architecture designs, vendor risk management etc.

Cost-benefit analysis will help select optimal controls focusing high and moderate risks.

Step 6 – Implement and Validate Controls

With target controls established, action plans have to be executed across people, process and technology domains with budgets allocated.

Carefully test effectiveness before full-scale deployment. For instance, conduct mock ransomware drills to validate response plans or schedule external security audits.

Continuously monitor progress against defined metrics to ensure risk tolerance levels achieved.

Step 7 – Periodic Risk Reviews

With dynamic threat landscapes, technologies and regulations, risks have to be revaluated atleast annually. More frequent reviews may be needed for faster changing setups.

Factor in new assets, threats, impacts, incidents and limitations of existing controls with each iteration. Integrate assessments with budgets and improvement plans.

By regularly refreshing risk insights and fine tuning controls, you can ensure security priorities and investments remain aligned with evolving business objectives.

Summing Up Effective Assessments

Though the process seems elaborate, systematically progressing through the steps of identifying assets, threats, vulnerabilities and controls can help determine critical risks and their mitigation strategies.

I hope this guide provided you a good overview of structured techniques used by leading cybersecurity teams for risk-based decision making. Please feel free to reach out if you need any assistance applying similar best practices to your organization.

Stay safe out there!