Risk management is an essential discipline for any organization. It does not matter what your business does, where it is located, what technology is used or how many people you are managing: Each and every organization is exposed to risks. How well you understand and handle your risk context can have direct implications on your business’ future.
It may sound like a cliché to say that knowing yourself is half the battle, but in this case, this is exactly the purpose of a risk analysis. It allows you to understand your current risk scenario, and how it may impact on your company’s goals and strategy.
As ISO 31000 states, risk is the “effect of uncertainty on objectives,” meaning that whenever we try to reach a goal, there’s the chance that things will not go according to plan. Performing a regular risk analysis will help you reduce the uncertainty factor, providing your company with a good measure of confidence that your risks are understood and are treated accordingly.
Back to basics: What is a risk analysis!
Risk analysis is a process focused on understanding the nature, sources, and causes of the risks that you have identified, how they can impact your company and trying your best to estimate the level of risk.
It is important you understand that a risk analysis will not take any measures to correct deficiencies such as a technological vulnerability (i.e. due to lack of patching) or a physical problem (i.e. placing your data center right next to a fuel station is not the best of ideas).
A risk analysis will help identify your issues in a given context, how likely are they to become a reality, how it would impact your organization and – in some cases – it may suggest what can be done to prevent it. The key here is reducing the uncertainty factor, so upper management, or whoever is responsible for risk management, can take an informed decision on how to approach risk treatment.
Why a risk analysis must regularly be performed
You started by following risk management best practices, performed detailed risk analysis, selected your context, identified assets within scope, carefully defined the levels of exposition and impact, and even recommended a few mitigating controls that were executed in the form of risk treatment plans. You can rest assured that your business is protected. Well, not necessarily.
As even the best-laid plans of mice and men oft go astray, it only takes a couple of factors for a risk analysis to stop been relevant for your business after a short span of time. Organizations perform within a live environment, affected by both internal and external factors. For instance, upper management may decide that expanding the business to a new market will require further cloud adoption; the government comes up with new legislation, or a client has a new request for a more robust disaster recovery plan or information security controls. This could all even happen simultaneously.
As long as there is a significant change to your context, new risk factors become a reality. If they are not adequately analyzed, you are either knowingly unprotected or, even worse, may have a false sense of security, which will turn into an even greater impact in the case of a major incident.
The fact of the matter is, any form of risk is constantly evolving and changing over time, particularly the ones related to technology and people. Security risks arise at every moment, and a risk analysis should provide a proper and accurate view of the potential risks and vulnerabilities to the confidentiality, integrity, and availability. For most companies, if your risk register is dated more than six months, it’s outdated, and its effectiveness has severely been decreased.
Aside from a few regulations or industry-specific policies, there is no precise method for performing a risk analysis that you are required to follow. Most standards avoid defining how may assessments must be conducted and especially how many times they must be completed again in a defined period. It is up to you and your company to understand business strategy, risk context and other factors that may influence the risk management process, in most cases, the best approach is to:
- Identify the scope of the initial risk analysis
- Identify assets within scope
- Gather data from all locations and assets within the scope
- Identify and document potential threats, likelihood of occurrence and impact
- Identify, assess, and document current protection measures, and determine and document how they handle the current threats
- Document the risk and, if necessary, recommend additional security
After producing an initial report, it will be easier to define what a regular risk analysis means. Even after establishing a six or twelve-month cycle, there will be cases where a single change is significant enough to justify a revisiting of your risk analysis.
An intelligent approach
It has become clear that you must dedicate a reasonable level of time and effort on your risk analysis. The amount of work required might even scare you at first, but several options will help you streamline your risk analysis process.
- Using Best Practices: Best practices have become an integral part of the mature business processes. For risk analysis and risk management in general, it is not different. Adopting standards like ISO 31000, ISO 27005 or NIST SP 800-30 will save you a lot of time and provide a more efficient There is no need to reinvent the wheel, just select the framework/standard that best suits your business.
- Risk Management Software:
- Step one: If you can, avoid using Excel or any other form of spreadsheets. (read more about why we feel Excel and spreadsheets have no place in GRC programs at Six reasons to avoid spreadsheets in GRC
- Step two: Selecting a risk management software that is aligned with the frameworks and standards you have already chosen will make a huge difference, especially in terms of risk/threats database, and automating tasks such as calculating the risk level. Using a dedicated risk management software may even allow you to run a “continuous” risk analysis, presenting your risk scenario on the go.
The key here is understanding what regular analysis means and allocating time and money in the right places. This level of information means business will be able to prioritize risk treatment based on a detailed analysis and avoid guesswork. Your future self is sure to thank you.