Improving an organization’s brand starts with the reliability and availability of its services. Whether individuals or other organizations, customers want to ensure that services are delivered and processes executed consistently. The importance of risk assessment in business is identifying vulnerabilities that may threaten these regular operations and, resultantly, an organization’s reputation. Risk assessments improve overall cyber defense posture, help protect endpoint devices, and minimize potential damage from specific threats.
Why Is It Important to Have a Risk Assessment?
Before an organization can improve its cybersecurity posture, it must understand the threats and vulnerabilities that can endanger its processes, procedures, or implementations. These threats may comprise common cyberattack methods, operational risk, or industry-specific risks.
Gaining a better understanding of the importance of risk assessment in business requires familiarity with:
- The purpose of risk assessments
- What risk assessments should include
- Risk assessments required for regulatory compliance
- A step-by-step guide to performing risk assessments
Conducting a risk assessment enables this vulnerability identification and categorization. In addition, for some organizations, such as those subject to HIPAA, periodic risk assessment may be mandatory for compliance.
What Is the Main Purpose of a Risk Assessment?
What is the importance of risk assessment? Essentially, you can’t fully determine what to protect and how if you don’t know your most vulnerable assets and the risks they face.
According to the National Institute of Standards and Technology’s (NIST) Special Publication 800-30, risk assessments are foundational to an organization’s overall risk management efforts. Per SP 800-30, risk assessments identify, classify, and prioritize risks to:
- Operations
- Assets
- Individuals
- Other organizations
The information gathered from a risk assessment informs your organization’s long-term cybersecurity strategy and day-to-day vulnerability remediation.
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What Should a Risk Assessment Include
Components, processes, and policies need to work together uniformly without being a weak link or exploitable to a cyber threat. Without addressing each of these categories, a risk assessment cannot be fulfilled. However, cybersecurity comprises only one (significant) aspect of a comprehensive risk assessment.
Your risk assessment should cover:
- Digital threats – Unauthorized access to your IT environment
- Technical failures – Effectively and efficiently addressing hardware or software failures
- Physical threats – Minimizing the effects of natural disasters caused by a fire or flood, preventing unauthorized access to nefarious individuals that can damage servers and network devices
Risk Assessments and Regulatory Requirements
Depending on an organization’s industry-specific services, it may be bound by specific legal or regulatory requirements. Carrying out a successful risk assessment accomplishes a critical step in validating compliance or identifying gaps to remediate.
While risk assessment may be an assumed component of overall risk management under some compliance frameworks, others explicitly require subject organizations to perform them periodically.
HIPAA Risk Assessment
Notably, the HIPAA Security Rule mandates risk assessments for protected health information (PHI) that evaluate vulnerabilities and the implemented technical, administrative, and physical safeguards. All healthcare entities and their business associates are subject to HIPAA and, therefore, must perform risk assessments.
However, HIPAA expressly does not rigidly define what risk assessments must include or how often they must occur. As a result, determining risk assessment scope and frequency are left up to organizations.
PCI DSS Risk Assessment
Risk assessments can also be used during payment card industry (PCI) compliance efforts. Complying with the PCI Data Security Standards (DSS) requires substantial cybersecurity and process implementations to protect cardholder data, and organizations must verify their compliance annually.
To better manage the PCI DSS’ regulatory burden, organizations can perform risk assessments in the interest of determining and reducing compliance scope.
Conducting A Risk Assessment: a Step-by-step Guide
When conducting a risk assessment across an entire organization, the objective is to eliminate or mitigate cyber security incidents to acceptable levels and eliminate compliance failures. Per NIST SP 800-30, a risk assessment is a four-step process:
- Preparing for the risk assessment:
- Properly scoping the assessed people, processes, and technologies
- Determining the strategy, technique, and tools that will be utilized
- Using an industry-specific risk model or tool, such as the US Department of Health and Human Services’ (HHS) Security Risk Assessment Tool for HIPAA compliance
- Conducting the risk assessment and categorizing and prioritizing risk likelihood by identifying:
- Applicable threats according to operational activity, industry, and location
- Likelihood of industry-specific sources generating a threat
- Potential damage to organizational operations if threat compromises organization’s network
- Communicating and sharing risk assessment information:
- The risk assessment’s findings should inform policy updates and future cybersecurity implementations.
- Use risk assessment information to conduct scenario-based training for staff.
- Maintaining the risk assessment:
- Use previous findings as a baseline to compare results for future risk assessments.
- Ensure constant oversight of identified high-risk threats and vulnerabilities.
Using an established and proven risk assessment strategy minimizes the opportunity for some aspect of a risk assessment to be missed. Another benefit of using an established risk assessment strategy is its replicability to gather accurate year-to-year comparisons.
Risk Prioritization
Risk assessments provide insight into an organization’s vulnerabilities, but a crucial step is prioritizing each risk’s likelihood of occurrence and potential impact. The categorization itself is simple, as HHS-provided guidance merely recommends ranking risk probability and impact as “Low,” “Medium,” or “High.”
Once your list of risks has been prioritized, your organization can begin remediation efforts by starting with the most critical or most easily addressed. Additionally, if there are compliance-threatening risks, their remediation should also be prioritized.
Some risks may not have remediation efforts that eliminate exploitable vulnerabilities. In these instances, organizations must take the appropriate steps to minimize the risk as much as possible, with thoroughly documented policies to guide ongoing management and mitigation.
A Completed Risk Assessment and Risk Mitigation Options
Risk mitigations options are available to choose from after a risk assessment is completed. A Designed Approving Authority (DAA), authorized cyber security specialist, or senior management staff determines any implementation actions to minimize risk down to an acceptable level, per NIST SP 800-30.
Depending on the severity of the threat or vulnerability, these mitigation options are available:
- Risk avoidance – Eliminating the potential for the threat or vulnerability to occur by not doing the designated IT operation
- Risk limitation – Employing cyber security controls or best practices that minimize the potential harm an identified threat or vulnerability can do to a company’s network. Risk limitation is critical if an organization chooses to accept and assume risks it deems unavoidable. Additional policy measures and security monitoring should be implemented to minimize threat likelihood and impact as much as possible.
- Risk planning – Accepting the risk and developing a strategy to minimize any potential harm that threats may cause by properly maintaining risk control combined with correct prioritization.
- Risk transference – Transferring the risk by purchasing insurance or outsourcing to a service provider. Organizations should note that while outsourcing can transfer the responsibility of mitigating risk, some compliance frameworks (e.g., PCI DSS) still hold organizations accountable if third-party cybersecurity failures occur.
Remember that the importance of carrying out a risk assessment is that they serve as a strategic information gathering phase during ongoing risk management practices. Periodic risk assessments are crucial for developing and managing a comprehensive cybersecurity infrastructure.
Layered, Professional, Comprehensive Risk Assessments
The importance of risk assessment in business is felt most in its long-lasting impact on overall cyberdefense. It begins with device protection and culminates in a company-wide culture of awareness and accountability.
Continuously improving cyberdefense posture is how organizations remain in good standing with clients, business partners, and legal and regulatory authorities. Risk assessment is a fundamental component of those efforts.
RSI Security will help you implement an effective risk assessment program—contact us today!
