Cyber risk has become an unavoidable part of operations. Following the COVID-19 pandemic, the FBI received a record number of cyber crime complaints; potential losses exceeded $6.9 billion for the year. As digital risks  continue to evolve, organizations of all sizes need to find ways to lower their total risk exposure. One of the most important tasks an organization’s leadership team can do to help mitigate cyber risk is a cyber risk assessment. This assessment is worth your time to help with lowering the cost of a potential security incident. It can also highlight undiscovered risk exposures, show businesses how threat actors are targeting their victims, and illuminate key steps for remediating exposures. 

A cyber risk assessment identifies an organization’s cyber risks and provides mitigation guidance. As part of the overall risk management process, the cyber risk assessment follows three general steps: 

1. Identifying assets and their values

2. Evaluating threats and vulnerabilities, as well as the likelihood of a cyber incident

3. Compiling an assessment, which includes mitigation recommendations for resolving vulnerabilities

A thorough cyber risk assessment should include both quantitative and qualitative components, calculating risks based on probability and potential impact. Risk assessments catalog an organization’s specific risks, potential impact, and  guidance to help mitigate identified vulnerabilities.

As cyber attacks become increasingly common, and as businesses grapple with increasingly complex digital threats, a cyber risk assessment is an important first step for businesses to identify threats that are most impactful to their operations. A thorough cyber risk assessment will help an organization be more prepared for a cyber attack, as well as have greater redundancies and procedures in place in case of human error or technological mishap. The following are five (5) benefits of a cyber risk assessment:

1. Reduce Security Incident-Related Costs

A cyber risk assessment provides a thorough understanding of identified potential risks, which can help organizations improve their mitigation strategies, before these vulnerabilities are exploited by threat actors.

For instance, through an assessment, a business may learn that some of its passwords have been compromised, due to a third-party data breach. After learning of this, the business can identify which passwords need to be reset and where their security needs to be improved.

2. Minimize Data Breaches

A cyber risk assessment can help mitigate the risk of data breaches by providing the business with valuable insights into how a threat actor may be able to exploit its vulnerabilities. For example, a business can proactively use the recommendations from the cyber risk assessment to determine what systems may have vulnerabilities that need urgent patching, as well as determine what types of threats are leaving the business exposed. 

3. Minimize Lost Productivity

Cyber incidents, such as ransomware attacks, can have significant and sometimes catastrophic impacts on day-to-day operations. Ransomware attacks have the potential to lead to an average system downtime of 20 days. A cyber risk assessment can help identify potential attack vectors, limiting the impact of a ransomware attack or potentially mitigating one entirely. 

4. Identify Redundant or Unnecessary Systems

As business backends increase in technological complexity, it’s possible to end up with redundant or even completely unnecessary legacy systems. These systems can increase a business’ costs, as well as introduce new doors for threat actors to exploit.

5. Support Your Teams

A cyber risk assessment will help focus tasks for IT and security teams, as well as provide management-aligned metrics for success. With a clear analysis of strengths and vulnerabilities, IT and security professionals know precisely where to focus their efforts. Plus, with a cyber risk assessment in hand, businesses can narrow down their vulnerable exposures and prioritize the value of cyber insurance.

Cyber risk assessments may seem daunting, but they consist of just five key elements. Keeping these elements in mind helps focus the assessment and ensure it’s as actionable after-the-fact as possible. 

Identify Critical Assets 

At the start of any cyber risk assessment, it’s imperative to identify all critical business assets. Assets can take the form of data, systems, and domains. 

Keep in mind data can come in many forms. Data can include: 

• Personal identifiable information (PII), such as driver’s license numbers, passport information, dates of birth, and Social Security Numbers

• Protected health information (PHI), such as health status or insurance information

• Critical business data

• Intellectual property

Identifying and Assessing Threats and Vulnerabilities

After defining assets, businesses should identify any potential threats and vulnerabilities. Keep in mind that cyber risks aren't limited to data breaches or malicious attacks. Threats can also include potential natural disasters, such as hurricanes or wildfires, human error, and system failure. After identifying threats and vulnerabilities, businesses should assess each risk individually.

Create a Mitigation Plan for Each Risk 

Once a business is aware of the risks it faces and the associated likelihood, it can begin to create a mitigation plan. Organizations should prioritize risks that are likely to occur, as well as risks that may be unlikely but have extremely high associated costs — such as a total data breach of unencrypted data. 

Businesses need to consistently reevaluate the mitigation plans produced during a cyber risk assessment. A cyber risk assessment can be run at any time. A business should conduct an assessment on a regular basis to determine what new threats may have arisen and determine what needs to be sufficiently mitigated. Additionally, a business should conduct a cyber risk assessment whenever a new system or application is added to the organization’s existing tech stack.

Prevent the Risk

With a prioritized mitigation plan in place, a business can address its most pressing cyber risks. However, it’s impossible to have a fully secure system, and risk can never be fully reduced to zero; there is always a chance of human error, or a brand new  system vulnerability. Instead, businesses should focus on reducing risk to an acceptable level. 

Businesses can use cyber insurance to help transfer the cost of any residual risk it may face after applying mitigations. Cyber insurance offsets the total costs a business will face if an incident should occur.  

Cyber risk is a part of the business environment, but with an active and unified approach to cyber risk, organizations can work to reduce risk and prevent incidents before they strike. Coalition’s Active Insurance is a unique, powerful tool that combines the best aspects of cybersecurity and cyber insurance. 

Coalition reduces risk through three main lines of defense: an Active Risk Assessment to provide a live view of digital risk, Active Protection to provide personalized monitoring and alerting, and Active Response to provide access to in-house claims and incident response teams.