According to IBM1, risk management is the process of identifying, assessing and controlling financial, legal, strategic and security risks to an organization’s capital and earnings. These threats, or risks, could stem from a wide variety of sources, such as financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters.
Risk mitigation is a part of risk management that involves taking proactive measures to reduce the likelihood and potential consequences of risks that could negatively affect your project2. Some of the common risk mitigation strategies are:
- Risk transfer: This involves transferring the risk allocation between different parties. For example, if an organization gets materials or products from a third party before distributing them, they can put all the risk for those certain materials in the hands of the third party instead.
- Risk acceptance: This involves accepting a certain risk and the threats it has for an organization for a certain period of time. The organization can focus on mitigating other risks and threats during this time.
- Risk avoidance: This is the strategy that an organization uses when the consequences of certain risks are too high for them to mitigate the risk. In these cases, it might be best for an organization to take measures to eliminate and avoid the risk altogether. For example, if a certain process is deemed risky for safety and other reasons, risk avoidance would be not utilizing the process for worker safety.
- Risk monitoring: This involves keeping a close eye on different processes and teams to assess risks as they happen. From there, measures can be taken to minimize the effect of these risks.
I hope this helps you understand the definition of risks and how to mitigate them. If you want to learn more, you can check out these articles:
Cyber risks are among the most serious and pervasive threats facing businesses today. Cyberattacks can cause severe damage to the reputation, operations, and finances of any organization, regardless of its size, industry, or location. According to a report by IBM, the average cost of a data breach in 2021 was $4.24 million, the highest in 17 years1. Moreover, cyberattacks can have far-reaching consequences for the society, the economy, and the environment, as they can disrupt critical infrastructure, compromise sensitive information, and endanger public safety.
However, managing cyber risks is not an easy task, especially in a complex and dynamic world where technology is constantly evolving and expanding. The number and variety of cyber threats are increasing, as hackers become more sophisticated, organized, and motivated. The attack surface, or the area where cyberattacks can be deployed, is also growing, as businesses adopt new technologies, such as cloud computing, artificial intelligence, internet of things, and 5G networks, that offer new opportunities but also new vulnerabilities. Furthermore, the impact and severity of cyberattacks are escalating, as they can affect not only the digital assets, but also the physical assets and the human assets of an organization.
Therefore, businesses need to adopt a proactive and comprehensive approach to managing cyber risks, that goes beyond the traditional methods of cybersecurity, such as installing antivirus software and firewalls. Businesses need to understand the nature and scope of the cyber risks they face, and implement effective strategies to mitigate them. Here are some steps that businesses can take to create a cyber risk management plan:
- Identify the most valuable digital assets in the organization: The first step is to identify the data, systems, and processes that are essential for the business, and that would cause the most harm if compromised. These assets can include customer information, intellectual property, financial records, trade secrets, and operational data. Businesses should also assess the legal, regulatory, and contractual obligations that they have to protect these assets, and the potential penalties and liabilities that they may incur if they fail to do so.
- Audit the data and intellectual property within the business: The second step is to audit the data and intellectual property that the business owns, generates, or uses, and determine where they are stored, how they are accessed, and who has access to them. Businesses should also classify the data and intellectual property according to their sensitivity and value, and apply appropriate security controls and policies to protect them. Businesses should also monitor and track the data and intellectual property throughout their lifecycle, and dispose of them securely when they are no longer needed.
- Perform a cyber risk assessment: The third step is to perform a cyber risk assessment, which is a systematic process of identifying, analyzing, and evaluating the cyber risks that the business faces. A cyber risk assessment should consider both the internal and external factors that can affect the security of the digital assets, such as the threat actors, the attack vectors, the vulnerabilities, and the existing defenses. A cyber risk assessment should also estimate the likelihood and the impact of each cyber risk, and prioritize them according to their severity and urgency.
- Analyze the security and associated threat levels: The fourth step is to analyze the security and associated threat levels of the digital assets, and compare them with the acceptable risk levels that the business has defined. This can help the business identify the gaps and weaknesses in its current security posture, and the areas that need improvement. Businesses can use various tools and frameworks, such as security ratings, maturity models, and compliance standards, to measure and benchmark their security performance and practices.
- Implement risk mitigation strategies: The fifth step is to implement risk mitigation strategies, which are actions that the business can take to reduce the likelihood or the impact of the cyber risks, or to transfer or accept them. Risk mitigation strategies can include technical, organizational, or behavioral measures, such as:
- Technical measures: These are the technologies and tools that the business can use to prevent, detect, and respond to cyberattacks, such as encryption, authentication, backup, antivirus, firewall, and DDoS protection. Businesses should also ensure that they update and patch their systems and software regularly, and follow the security best practices and standards.
- Organizational measures: These are the policies and procedures that the business can implement to govern and manage its security operations, such as risk management, incident response, business continuity, disaster recovery, and vendor management. Businesses should also establish clear roles and responsibilities for security, and allocate sufficient resources and budget for security.
- Behavioral measures: These are the actions and behaviors that the business can encourage or discourage among its employees, customers, and partners, to enhance or impair its security, such as awareness, training, education, and culture. Businesses should also foster a culture of security, where everyone understands and follows the security rules and values.
- Monitor and review the cyber risk management plan: The sixth step is to monitor and review the cyber risk management plan, and measure its effectiveness and efficiency. Businesses should also update and revise the plan regularly, to reflect the changes in the business environment, the technology landscape, and the threat landscape. Businesses should also conduct periodic audits and tests, to verify and validate the security controls and policies, and identify and correct any errors or gaps.
By following these steps, businesses can create a cyber risk management plan that can help them protect their digital assets, and cope with the cyber challenges and opportunities in a complex and dynamic world. Cyber risks are inevitable, but they are not insurmountable. With proper preparation and prevention, businesses can manage cyber risks, and maintain their competitiveness and resilience.