Cybersecurity risk assessment: A guide to identifying and prioritizing cyber risks
- A cybersecurity risk assessment helps you understand the specific risks that threaten your business and how you can manage them more effectively.
- During a risk assessment, you’ll evaluate your risk areas, threats and security controls so you can develop a risk management roadmap that sets priorities based on impact.
- Work with a third-party cybersecurity advisor to do this assessment, as an in-house assessment team will usually lack the niche expertise and fresh perspective needed here.
The cybersecurity landscape is more volatile than ever. Is your business prepared to meet this challenging moment?
To find out — and to help ensure your organization is prepared and resilient — conduct a cybersecurity risk assessment. A risk assessment helps you understand the threats you face and strengthen your defenses.
Keep reading to learn more about what a cybersecurity risk assessment is and how to start yours. Plus, we’ve put together a downloadable checklist to guide your risk assessment.
What is a cybersecurity risk assessment?
A cybersecurity risk assessment is an in-depth review of your business’s cybersecurity program and risk level. The goal of an assessment is to evaluate your threat environment and then align your cybersecurity efforts to better protect against those risks.
- A risk assessment includes both external threats, like phishing scams or ransomware attacks and internal threats, like employee fraud.
- An assessment will consider your specific industry. A manufacturing company faces different risks than a financial services firm, which will also differ from a construction company that contracts with the military.
- During the assessment, you’ll also evaluate your security controls to determine whether those controls can successfully mitigate your threats to an acceptable level or need improvements.
Cybersecurity risk assessment vs. cybersecurity audit: What’s the difference?
A cybersecurity risk assessment and a cybersecurity audit are two different, but related activities. Here are the key differences:
| Cybersecurity risk assessment | Cybersecurity audit | |
|---|---|---|
| Goal |
Big-picture evaluation to understand your cybersecurity threats, controls, gaps and overall level of risk. |
Audit to determine whether your security controls meet the standards of a specific cybersecurity framework like NIST CSF or ISO 27001. |
| Purpose |
Help you make business decisions about managing risk. |
Demonstrate compliance with a cybersecurity framework. |
| Focus |
Identifying threats. |
Evaluating specific controls |
| Primary audience |
Your executives, board and IT leadership (although it may be useful to external stakeholders too). |
Customers, clients, partners, investors and regulators |
| Outcome |
A clearer awareness of your enterprise-level cybersecurity risks and how to manage them. |
External stakeholders are satisfied that you meet their standards or requirements for doing business. |
Why cybersecurity risk assessments matter for business leaders
Business leaders increasingly understand that cybersecurity is a financial business risk. However, you probably don’t know your specific vulnerabilities or which threats you should prioritize.
A cybersecurity risk assessment will help you better evaluate your risk of threats like:
- Data breaches
- Unauthorized network access
- A ransomware or malware incident
- Unauthorized funds transfer or fraud
- Business email compromise
- Business interruption
- Risks associated with a mobile workforce or remote work
During an assessment, you’ll get a better sense of how these and other cybersecurity threats affect your specific business and if you have the controls and governance needed to defend against them. This is a key step toward making your business not just more secure but also more cyber-resilient.
A cybersecurity risk assessment offers additional strategic benefits
Beyond understanding your threat environment, risk levels and priorities, completing a cybersecurity risk assessment can also offer additional strategic benefits. These include:
- Meeting compliance standards: For businesses that operate in regulated industries, an assessment helps you understand whether you meet security compliance requirements.
- Satisfying insurers: A cyber risk assessment is increasingly a requirement to get cybersecurity insurance, especially if you want to pay reasonable rates.
- Demonstrating a board-level commitment to security: Boards don’t get a pass on cybersecurity oversight anymore, and are required to take more responsibility for managing organizational cyber risk.
- Fulfilling due diligence requirements: Cybersecurity due diligence is an essential element of any transaction, with sellers needing to prepare their businesses for scrutiny (and potentially command a higher price) and buyers wanting to clearly understand the risks they could be taking on.
- Establish trust: Conducting a cybersecurity risk assessment demonstrates a level of organizational maturity that impresses partners, customers, clients and other external stakeholders.
- Protect your reputation: Managing your cybersecurity risk is also an investment in protecting your reputation from damaging incidents that could hurt your public image.
- Better understand AI risks: There’s significant overlap between cyber and AI risks, so a risk assessment can also help you better understand the risks you face as you integrate AI more deeply into your organization.
What does a cybersecurity risk assessment include?
A cybersecurity risk assessment typically involves working with a third-party cybersecurity advisor to evaluate your risk and cyber readiness levels so you can manage them more effectively. Key elements of an effective assessment include:
Choose a cybersecurity risk advisor
Most successful cybersecurity risk assessments start by bringing in an external partner to conduct the assessment. This is the gold standard. You shouldn’t even consider trying to do an assessment in-house unless you have a skilled, knowledgeable internal audit team in place (and even then, your internal team may be too close to your business to offer the most useful perspective).
Evaluate cybersecurity as part of a broader enterprise risk assessment
Cybersecurity risk is intertwined with other enterprise-level risks, like operational risk, AI risk and technology risk. Mature organizations will typically do a cybersecurity risk assessment as part of a broader enterprise risk assessment that evaluates all these areas.
If you can, take this approach, because it offers a holistic perspective that’s invaluable to understanding the complete risk picture, which leads to smarter business decisions.
Include a business impact analysis
A good risk assessment should include a business impact analysis to evaluate how a disruption to each department within your business would affect your business as a whole. This involves identifying the type of information each department is using and how downtime in a particular department would hurt your operations or reputation.
Align your approach to industry standards
Consider how your industry as a whole manages risk and cybersecurity. Many industries use a particular risk or cybersecurity framework, like NIST or ISO. Align your assessment to whatever your industry standard framework is, while also adapting for areas like AI that may not be incorporated into existing frameworks.
How to conduct a cybersecurity risk assessment
A cybersecurity risk assessment is a process that includes several stages. While your particular assessment may align with a specific risk framework like NIST 800-30, here are key steps that you should expect to see in most assessments:
1. Define assessment objectives
Establish a clear scope for your assessment as well as the specific outcomes you plan to achieve.
2. Inventory systems and data
Create an inventory of all systems and data that are vulnerable to cybersecurity-related threats.
3. Identify threats and vulnerabilities
Based on your inventory, look for what are called inherent risks or threats that exist prior to implementing mitigating controls.
4. Evaluate likelihood and impact
Assess your risks to determine which are the most dangerous or likely to occur, classifying the most urgent as high-likelihood, high-impact.
5. Prioritize and address risks
You can’t defend against every risk at all times, so you want to create a risk management roadmap that establishes priorities based on the likelihood and impact analysis you’ve completed, then implement controls to mitigate those risks.
6. Monitor and reassess
Risks are constantly changing, so think of risk assessment as an evolving process that involves periodic formal assessments, regular testing and ongoing monitoring.
Cybersecurity risk assessment checklist
Download Wipfli’s cybersecurity risk assessment checklist to get an actionable one-pager that lays out how to get ready for, conduct and learn from a cybersecurity risk assessment.
Get your cybersecurity risk assessment checklist
How Wipfli can help
We advise businesses on managing cybersecurity and technology risk. Ask us for help completing a cybersecurity risk assessment so you can understand your threats and make smarter decisions about how to best protect your business. Start a conversation.
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