Risk analysis refers to the review of risks associated with the particular action or event. The risk analysis is applied to information technology, projects, security issues and any other event where risks may be analysed based on a quantitative and qualitative basis. Risks are part of every IT project and business organizations. The analysis of risk should be occurred on a regular basis and be updated to identify new potential threats. The strategic risk analysis helps to minimize the future risk probability and damage.
Enterprise and organization used risk analysis:
- To anticipates and reduce the effect of harmful results occurred from adverse events.
- To plan for technology or equipment failure or loss from adverse events, both natural and human-caused.
- To evaluate whether the potential risks of a project are balanced in the decision process when evaluating to move forward with the project.
- To identify the impact of and prepare for changes in the enterprise environment.
Benefits of risk analysis
Every organization needs to understand about the risks associated with their information systems to effectively and efficiently protect their IT assets. Risk analysis can help an organization to improve their security in many ways. These are:
- Concerning financial and organizational impacts, it identifies, rate and compares the overall impact of risks related to the organization.
- It helps to identify gaps in information security and determine the next steps to eliminate the risks of security.
- It can also enhance the communication and decision-making processes related to information security.
- It improves security policies and procedures as well as develop cost-effective methods for implementing information security policies and procedures.
- It increases employee awareness about risks and security measures during the risk analysis process and understands the financial impacts of potential security risks.
Long-Term Cost Reduction
Early identification and prevention of risks in your organization can reduce operational costs. Restoring or restructuring your IT infrastructure is much more costly than developing preventive measures to cyber threats. Plus, tight controls drive more consistent processes and higher quality.
Provides a Template for Future Assessments
Investing in implementing cyber risk assessment and analysis in your organization makes it easier to reapply these processes. Not only will you have personnel with first-hand knowledge of the concepts; you will also have the right tools and templates to streamline these activities.
Identifying your vulnerabilities and attack vectors allows you to look at the complete organizational picture. This process highlights your organization’s weak areas, allowing you to make informed decisions regarding the business operations.
Steps in the risk analysis process
The basic steps followed by a risk analysis process are:
Conduct a risk assessment survey:
Getting the input from management and department heads is critical to the risk assessment process. The risk assessment survey refers to begin documenting the specific risks or threats within each department.
Identify the risks:
This step is used to evaluate an IT system or other aspects of an organization to identify the risk related to software, hardware, data, and IT employees. It identifies the possible adverse events that could occur in an organization such as human error, flooding, fire, or earthquakes.
Analyse the risks:
Once the risks are evaluated and identified, the risk analysis process should analyse each risk that will occur, as well as determine the consequences linked with each risk. It also determines how they might affect the objectives of an IT project.
Develop a risk management plan:
After analysis of the Risk that provides an idea about which assets are valuable and which threats will probably affect the IT assets negatively, we would develop a plan for risk management to produce control recommendations that can be used to mitigate, transfer, accept or avoid the risk.
Implement the risk management plan:
The primary goal of this step is to implement the measures to remove or reduce the analyses risks. We can remove or reduce the risk from starting with the highest priority and resolve or at least mitigate each risk so that it is no longer a threat.
Monitor the risks:
This step is responsible for monitoring the security risk on a regular basis for identifying, treating and managing risks that should be an essential part of any risk analysis process.
Types of Risk Analysis
The essential number of distinct approaches related to risk analysis are:
Qualitative Risk Analysis
- The qualitative risk analysis process is a project management technique that prioritizes risk on the project by assigning the probability and impact number. Probability is something a risk event will occur whereas impact is the significance of the consequences of a risk event.
- The objective of qualitative risk analysis is to assess and evaluate the characteristics of individually identified risk and then prioritize them based on the agreed-upon characteristics.
- The assessing individual risk evaluates the probability that each risk will occur and effect on the project objectives. The categorizing risks will help in filtering them out.
- Qualitative analysis is used to determine the risk exposure of the project by multiplying the probability and impact.
Quantitative Risk Analysis
- The objectives of performing quantitative risk analysis process provide a numerical estimate of the overall effect of risk on the project objectives.
- It is used to evaluate the likelihood of success in achieving the project objectives and to estimate contingency reserve, usually applicable for time and cost.
- Quantitative analysis is not mandatory, especially for smaller projects. Quantitative risk analysis helps in calculating estimates of overall project risk which is the main focus.
How Do You Perform Risk Analysis in Cybersecurity?
Within these standards are several best practices for performing a cyber risk assessment and analysis. These steps for a cybersecurity risk assessment will help identify specific vulnerabilities based on your organizational needs and the common risks in your industry.
Create a Risk Management Team
The first step in performing a security risk analysis is to create a cross-functional group that can deliver the necessary attention to the details of the different areas and risks related to your data security and information technology (IT) systems.
This team should include:
- Senior management
- Chief information security officer (CISO)
- Privacy officer
- Product management
- Human resources representative
- Manager for each business group
Identify and Map Your Systems and Assets
Document every device and IT asset on the network, including computers, tablets, routers, printers, servers, and phones. In addition, you must identify how they are used and interconnect with one another.
Catalog the software-as-a-service, platform-as-a-service, and infrastructure-as-a-service used by every department. Specify which departments and vendors have access to which services. Include types of data and categorize sensitive data separately. Note how information travels through the network and among stakeholders, and what components it touches along its journey.
Identify Vulnerabilities and Potential Threats
Your risk management team will need to identify threats and vulnerabilities from all parts of your organization. Vulnerability scanners can make it easier to locate vulnerable equipment. Still, it is up to your team’s expertise to determine flawed security policies, physical vulnerabilities, and other cyber threats hidden under your network and systems. Does your business use digitally connected “internet of things” (IoT) devices? How susceptible are employees to “phishing” emails that could allow malware on your system?
Potential threats include:
- Unauthorized access to your network
- Misuse of information or data leaks
- Ransomware attacks
- Human error or negligence
- Process failures
- Data loss
- Sensitive data breaches
- Disruption of services