The Importance of Risk Management In Cyber Security

Organisations face many types of cyber threats that pose great security risks. The UK Government’s Cyber Security Breaches Survey 2024 estimates that half of businesses report facing a security breach or attack in the last 12 months. At 70%, this figure is even greater for medium enterprises and larger businesses at 74%. 

With ransomware attacks, data breaches, phishing, and other threats becoming increasingly common, businesses are at risk of devastating losses. Advanced security measures and technologies are important, but effective risk management is an equally vital area of cyber security. 

So, what is risk management in cyber security?

In short, risk management is the continuous process of pinpointing, measuring, and responding to risk. Risk refers to the potential for damage or loss when a security threat exploits a weakness.

Managing risk involves evaluating the chance of an event and its potential impact, then concluding on the best approach to manage the risk. 

The importance of risk management in cyber security shouldn’t be underestimated. Risk management is a way for businesses to identify potential threats and dangers, then take steps to stop or lower the likelihood of them occurring. 

We’ll cover risk management in cyber security in more detail below, including examples of cyber security frameworks and the general risk management approach that businesses follow. 

The Importance of Risk Management in Cyber Security

In the past, organisations would simply add firewalls to their network and consider their security all dealt with. Now, however, cyber threats have evolved to become more complex and dangerous. 

Determined hackers and scammers are now all over the world, equipped with the necessary resources and tools to carry out their work. Even big enterprises are at risk, as in 2024, Disney, Ticketmaster, and Dell have all experienced data breaches. 

Security risks need to be assessed and handled to stop information breaches from occurring and prevent cyber criminals from accessing sensitive data. 

If proper cyber risk management policies are not in place, businesses put themselves in danger of cyber attacks that are hard to bounce back from. This can cause severe consequences, including financial losses, reputational damage, and operational disruptions. 

Effective risk management in cyber security doesn’t just concern threat prevention – it’s about being prepared to respond and recover from incidents. 

Identifying potential threats and implementing strategic measures to mitigate them ensures organisations can protect their assets, keep in line with legal and regulatory requirements, and maintain customer trust. 

The bottom line? Strong risk management policies are essential for achieving long-term security and maintaining business continuity. 

The Benefits of Risk Management in Cyber Security

Cyber security risk management can enhance the effectiveness and performance of an organisational cyber security program. 

Here are some of the benefits of risk management that concern business security. 

1. Improved Security

Cyber security risk management strategies help businesses pinpoint the largest threats that they face. 

Once they identify a prioritised list of security threats, businesses can safeguard their security by addressing the largest threats first.

2. Improved Cyber Security Rate of Investment

Cyber risk management programs are created to make sure businesses centre their risk correction methods around the largest threat to the organisation. 

This stops important resources from being wasted on smaller threats, which improves the Cyber Security Rate of Investment (ROI).

3. Legal Compliance

Regulations concerning data privacy pay attention to sensitive information and regularly need risk management programs. 

Adding cyber security risk management makes sure that businesses are carrying out their legal sector compliance obligations. 

4. Insurance Coverage

The growth of cyber threats means that insurance coverage is harder and costs more to obtain. 

This has levelled out recently, as the Financial Times claims that the price of cyber insurance rose by 11% in the first quarter of 2023, compared to 28% in the previous quarter. However, this is still much more expensive than it was a few years ago. 

Good cyber security risk management programs can show that a business is less at risk, which can make it easier to acquire insurance. 

What Is Cyber Security Risk Management Framework?

A cyber security framework consists of regulations which outline standards to specify methods and solutions a business should take to watch, measure, and reduce cyber security risk. 

Several risk management frameworks can help businesses assess their security risk level. The most common examples include:

The National Institute of Standards and Technology (NIST) Cyber Security Framework

The NIST Cyber Security Framework uses existing guidelines and practices, like the ISO 27001/27002 information security standards, to help businesses handle cybersecurity risks. 

This framework concerns five main functions: Identify, Protect, Detect, Respond, and Recover.

ISO 31000 Risk Management Standard

The International Organisation for Standardisation (ISO) 31000 is an international risk management standard. It provides general guidelines and ways to handle risk management.

Compared to other risk management frameworks, the ISO 31000 can be used in all types of businesses in any industry.

COSO ERM Framework

The Committee of Sponsoring Organisations of the Treadway Commission (COSO) is a private-sector framework which delivers advice on enterprise risk management. 

The COSO ERM framework is based on eight principles: Control Environment, Risk Assessment, Control Activities, Information and Communication, Monitoring Activities, and Enterprise Risk Management Objectives. 

At Net Consulting, we provide custom IT security consulting services based on the five stages of NIST’s Cyber Security Framework: Identify, Protect, Detect, Respond, and Recover. 

Supported by our skilled team of UK consultants, the NIST framework is respected as it determines the complete extent of managed cyber security services, concerning both prevention and response. 

Unsure about which service you require? Give us a call at +44(0)2920972020 to chat about your security concerns in more detail. 

The Cyber Security Risk Management Approach

Each of the frameworks above is slightly different from the other, but they all involve a similar group of steps. 

Businesses tend to follow a risk management process that concerns the following steps. 

Step One: Identifying Risk

Identifying risk establishes the context for making risk decisions, and matching risk management with organisational strategies.

This step involves the following:

• Scope Definition: Establish which assets and systems need to be examined, the types of threats to take into account, and a timeline for measuring risks.
• Asset Inventory and Prioritisation: Identify all data, devices, software, and other assets inside the network and establish which are the most important to the business.
• Resource Allocation: Identify key IT services and business processes, then allocate financial and other resources for cybersecurity risk management.
• Legal Compliance: Make sure the business follows all legal, industry and regulatory standards. 

Step Two: Assessing Risk

Assessing risk pinpoints and prioritising threats and vulnerabilities, calculating their potential effects.

• Threat Identification: Recognise potential threats, like cyber attacks or employee errors.
• Vulnerability Analysis: Identify system, process, or asset weaknesses that threats can exploit, like misconfigured firewalls or weak access controls.
• Impact Evaluation: Assess the potential consequences of threats, including service disruptions, data theft, and financial losses.

Risk is determined by the likelihood of a threat occurring and the potential damage it could cause. 

Businesses can consider several factors to measure how likely a threat is. Current security controls, the type of data a business controls, and the state of IT weaknesses can all affect the likelihood of threats. 

Step Three: Responding To Risk

Depending on the risk assessment, businesses decide how to handle potential risks:

• Risk Mitigation: Use security controls to lower the chance or impact of weaknesses being exploited.
• Risk Remediation: Address weaknesses to prevent exploitation.
• Risk Transfer: If mitigation and remediation are not possible, a business may transfer risk responsibility to a different party, often through cyber insurance policies. 

Step Four: Monitoring

Constant monitoring ensures that security controls are effective and that regulatory requirements are met. 

The business also monitors its own IT network and the wider threat landscape. Changes in either the appearance of new threats or extra IT assets can highlight new weaknesses or render previously useful controls ineffective. 

Continuous surveillance can help businesses alter their cyber security risk management programs in good time. 

Conclusion

Risk management is an important foundation for effective cyber security. Other than protecting business assets, it helps organisations anticipate, prepare for, and respond to cyber threats in a controlled, effective manner. 

Prioritising risk management can help businesses safeguard their operations, data, and reputation against the prevalence of cyber threats.

We hope this post helped explain the importance of risk management in cyber security. 

At Net Consulting, we are dedicated to providing expert cyber security consulting services tailored to your needs. 

Whether you need general guidance on improving your organisation’s cyber security or looking to implement a robust risk management framework, our skilled team is here to help. 

Discover how we can assist you in safeguarding your business against cyber threats. Give us a call at +44(0)29 2097 2020 or send us a message through our contact page to talk about your concerns in more detail.