The insurance industry is experiencing cybersecurity insurance as one of its fastest-growing businesses. Cybersecurity risks are on the rise with an upsurge in cyberattacks. There is also an increase in government regulatory cybersecurity policies, with organizations fully aware of the rising cyber risk.
Furthermore, organizations feel a dire need for cyber risk assessment due to the advancements in smart technologies, digitalization, and globalization. Cyber vulnerabilities lead to significant cybersecurity risks, like cyber threats and data breaches. Most of the issues are due to the unavailability of data. The lack of data presents challenges in many areas, such as cybersecurity risk assessment, management, and the overall cybersecurity insurance domain. With the help of proper risk assessment and cyber insurance, organizations can reduce their financial risks related to online business.
Cybersecurity risk assessment perspective
In organizations, analysis and assessment of cyber risk highlights vulnerabilities in their cybersecurity posture, basic business processes, and advanced operational procedures, leading to strategic planning. It enables an opportunity to identify the vulnerabilities before they can be exploited, facilitating the organization to pre-emptively address the associated gaps and improve its capability to manage cyber risk.
The cybersecurity risk assessment perspective not only focuses on cyber risk but also considers the integrated functionality of cybersecurity and cyber insurance in risk assessment and mitigation. Organizations need to perform a thorough review of the available datasets as per the identified cyber risk. Moreover, a detailed analysis of datasets enables a deeper understanding and supports the stakeholders, who are engaged in cyber risk control. An effective cybersecurity risk assessment involves defining the scope of risk, identification of risk, risk analysis, risk evaluation, and documenting the cybersecurity risk.
Cybersecurity risk management framework
Every organization uses the Internet as the communication medium associated with its IT infrastructure, exposing the business setup to cyberattacks. Organizations need to identify assets vulnerable to cyber risk. Risk mitigation during risk assessment is vital not only to prevent data breaches but also to reduce the higher cost associated with regulatory and compliance issues.
- Defining the scope of risk assessment
- Identifying the cybersecurity risks
- Analyzing cybersecurity risks
- Determining and prioritizing cybersecurity risks
Cybersecurity risk assessment is broadly classified into the following steps:
- Defining the scope of risk assessment: The scope can include the risk assessment for the complete business and/or a specific business unit. The security experts deal with the ever-growing IT infrastructure, the latest regulations, and the potential risks. Both the vulnerabilities and consequences related to cybersecurity risk define the overall scope of the assessment. Vulnerabilities can be due to inadequate security, mismanagement of supply chains, and/or vendor relationships. Consequences largely impact the assessment process as cyber threats exploit vulnerabilities.
Identifying the cybersecurity risks: Risk identification involves identifying and creating an account of physical as well as logical assets. Both of these assets fall under the scope of risk assessment. The assets can be an Active Directory server or an image archive, and/or communication setups. This step also involves gaining clarity about the interconnectivity between the identified assets and business processes.
The process of risk identification also involves identifying cyber threats. The latest information on cyber threats can be related to different business verticals, specific processes, particularly across varied geographical locations. Organizations must identify the risks carefully before determining the protection required for the corresponding cyber risk.
- Analyzing cybersecurity risks: Risk analysis involves determining the chances of a risk’s occurrence and observing the impact of the risk on the organization. Here, the capability of a cyber threat is also evaluated by exploiting the identified vulnerability. This evaluation is dependent on factors like discovering, exploiting, and reproducing the cyber threat.
Determining and prioritizing cybersecurity risks: This step largely involves finding the risk and managing it as per the severity of its occurrence. There are various tolerance levels beyond which risks are prioritized. At times, a business activity might have to be discontinued to avoid a cyberattack. Organizations also share the cyber risk with third parties by outsourcing operations like DDoS attacks, buying cyber insurance, etc.
In general, the first party covers costs related to cyber events, like informing the users about a cyber threat or data breach. On the other hand, the third party covers the costs associated with the cyber threat or data breach settlement, including the applicable fines and penalties.
Furthermore, the organization notifies the team responsible for implementing the process to mitigate the highest risks. The team is also accountable for the progress and completion of risk mitigation.
- Documenting cybersecurity risks: This step is also very important, as all the risk case studies are listed in a risk register. The teams must provide management with the latest updates and review cycles. Some of the vital aspects of a risk register include the risk scenario, risk identification date, existing security controls, and current risk levels. The register also contains the treatment plan, progress status, final status, and risk owner. The treatment plan comprises the planned activities along with the timeline to reduce the tolerance level. While the progress status conveys the implementation status, the final status communicates the implemented status. The risk owner assures that the risk will be within the tolerance range.
Organizational security is of utmost importance and must be safeguarded against cyberattacks. With the increase in cyberattack events, the effort to manage cyber risk across the enterprise has also become challenging. The main challenges are ever-changing modern security setups, an upsurge of third-party vendors, ever-evolving technologies, and ever-expanding regulatory compliance. The cyberattacks have further raised expectations for managing security and compliance.
Thus, the organizations must align with the cyber risks by using a risk assessment process to identify and assess the cyber risk, select a mitigation plan, and continuously monitor the internal controls. Moreover, the risk management framework must include vital aspects like re-assessment, new testing, and a risk mitigation module.
A well-developed risk assessment framework is extremely helpful in identifying, describing, and communicating any cyber risk-related information to technical and non-technical employees. Eventually, the risk assessment framework helps and guides the team to address and prevent cyber risks efficiently.