Understanding the Process of Conducting a Security Risk Assessment

In 2024, the financial impact of cybersecurity incidents reached new heights. The global average data breach cost rose to $4.88 million, representing a 10% increase from 2023. This surge in costs highlights the increasing complexity of cyberattacks and their broader consequences.

The aftermath of these breaches extends well beyond the immediate response efforts. Almost 40% of organizations spent over $3 million annually in data breach-related litigation costs last year. For organizations with large third-party networks, the expenses are even higher.

With this in mind, it’s clear that safeguarding your organization’s data is more crucial than ever. But here’s the real question: Do you feel certain that your security strategy is truly equipped for today’s threat landscape? And have you calculated the financial toll you’d face if critical systems were to fail? 

These questions are essential for every organization. To find the answers, organizations must engage in comprehensive security risk assessments.

In this article, let’s have a look at this security risk assessment and navigate through the process of conducting it.

What is the Security Risk Assessment?

Simply put, a security risk assessment identifies potential threats to information systems, networks, and data and evaluates the consequences if these threats materialize. Performing assessments regularly—annually or after any significant organizational change, such as mergers, acquisitions, or new technology rollouts—is crucial to staying ahead of the curve. As cyber threats evolve, these assessments are necessary to stay proactive and secure.

Understanding the scope of these threats leads us naturally to explore how this concept fits into broader organizational strategies.

Risk Assessment vs. Risk Management

While the terms “risk assessment” and “risk management” are often used interchangeably, it’s important to understand their distinct roles in an organization’s security strategy.

A risk assessment is primarily a proactive approach. It focuses on evaluating your current infrastructure, identifying weaknesses, and uncovering vulnerabilities. You’re taking the first step toward effective risk management by performing a risk assessment.

On the other hand, risk management is a broader concept, incorporating both proactive and reactive approaches. It aims to reduce risk through continuous application of best practices. This includes managing infrastructure, enforcing identity management policies, and educating employees on password best practices.

The table below further shows a clear comparison of Risk Assessment vs. Risk Management:

Aspect	Risk Assessment	Risk Management
Definition	A process to identify, evaluate, and prioritize potential threats to systems, data, and assets.	A broader approach focused on reducing risks by implementing mitigation strategies and continuously managing risk exposure.
Focus	Proactively identifying risks and vulnerabilities in infrastructure.	Both proactive and reactive, addressing the implementation of strategies to reduce risks and managing impacts when attacks succeed.
Approach	Primarily proactive: identifying potential weaknesses before they become problems.	Combines proactive measures and reactive responses to control risk over time.
Timing	Performed regularly or when significant changes occur (e.g., new systems or incidents).	Ongoing, continuous process of managing and reducing risks across all levels of the organization.
Primary Goal	Identify and assess vulnerabilities and threats that may impact the organization.	Develop and apply mitigation strategies, manage current risks, and respond to incidents effectively.
Scope	Limited to understanding and identifying risks and their potential impacts.	Includes creating a complete risk mitigation and recovery strategy to safeguard operations.
Actions	Risk identification, vulnerability assessments, and threat evaluation.	Risk reduction, policy enforcement, employee training, system updates, and incident response.
Example	A security risk assessment identifies weaknesses in the company’s firewall configuration.	Risk management includes ongoing firewall updates, employee training on security best practices, and a disaster recovery plan.

Despite robust risk assessments and proactive risk management, some attacks may still succeed. Therefore, reactive strategies must also be integrated, as we’ll explore next.

Also Read: Determining Internal and External Business Risk

Why are Security Risk Assessments Essential?

Although many organizations, particularly small businesses, might feel that securing their systems is overwhelming, skipping security risk assessments is costly. In fact, organizations are increasingly investing in security, with 51% boosting their cloud security budgets. Here’s why regular assessments should be at the top of your to-do list:

1. Justifying Costs

A security risk assessment provides a detailed list of vulnerabilities that you can present to upper management. This helps justify the need for additional resources and a larger budget. Without concrete data, convincing leadership of the evolving nature of risks and the need for updated security measures becomes difficult.

2. Boosting Productivity

Risk assessments allow you to address vulnerabilities proactively before they result in security incidents. Shifting from a reactive to a proactive approach makes your IT team more effective, ensuring their time is spent on areas with the most significant impact. Additionally, risk assessments highlight which risks require urgent attention and which can be deprioritized.

3. Bridging the Gap

Security isn’t just an IT issue—it’s an organizational one. Risk assessments serve as a bridge to unite senior management and IT teams. By clearly outlining the risks, IT can engage leadership in meaningful discussions about security measures, helping align the entire company towards common security goals.

4. Enhancing Communication

At its core, risk assessments improve communication throughout the organization. To conduct a thorough assessment, IT teams need insights from every department. This collaboration ensures a deep understanding of how systems are used, how information flows, and where the security gaps may lie. Furthermore, these assessments allow IT and compliance teams to communicate the importance of information security. This, in turn, helps everyone understand their role in protecting the company’s data.

Having established why security risk assessments are so essential, let’s now focus on the different types of assessments that should be considered.

What Are the Different Types of Security Risk Assessments?

Cyberattacks are becoming increasingly sophisticated. Malware-free attacks accounted for 75% of detected incidents, while the frequency of cyberattacks surged by 30% in Q2 2024. 

Owing to this, security risk assessments must encompass a wide range of potential risks. Below, we’ll explore the different types of security risk assessments and their importance:

1. Physical Security Assessment

How easy is it for unauthorized individuals to physically access your critical systems? This assessment evaluates physical entry points to your organization, such as:

• Do you have security measures at building entrances?
• Are visitors logged and monitored?
• Are sensitive areas under constant surveillance with security cameras?
• Is access to server rooms controlled by biometric locks?

Physical security assessments, including penetration testing, help identify your systems’ vulnerability to physical breaches.

2. IT Security Assessment

What is the current state of your IT infrastructure and network security? An IT security assessment looks at the overall health of your systems, network protocols, and security measures, focusing on:

• Identifying broad system vulnerabilities that leave your business exposed to attacks.
• Examining misconfigurations that can open doors for attackers.
• Ensuring compliance with shared security responsibilities, especially in cloud services.

This assessment identifies potential security gaps and helps improve network defenses.

3. Data Security Assessment

How secure is your company’s data? A data security assessment focuses on how data is accessed and protected, considering elements like:

• Are the least privilege or zero trust access controls implemented?
• Do you use network segmentation to limit data access?
• Are identity management processes robust and secure?

The assessment identifies areas where data access could be further restricted, ensuring sensitive information is only accessible to those who absolutely need it.

4. Application Security Assessment

Are your company’s applications built with security and privacy in mind? This assessment evaluates potential vulnerabilities within your applications, covering:

• Adherence to security-by-design and privacy-by-design principles.
• Testing for vulnerabilities through white-box and black-box penetration testing.
• Ensuring that application access is restricted to the necessary personnel.

Application security assessments help strengthen application code and control access, minimizing security risks within your software.

5. Insider Threat Assessment

Insider threats are often overlooked but can be just as damaging, if not more, than external threats. These threats go beyond malicious employees and may include:

• Unapproved devices or outdated hardware pose a security risk.
• Unintentional mistakes or negligence include weak passwords (e.g., “password”).
• Advanced Persistent Threats (APTs), where cybercriminals or state-sponsored hackers target your network over an extended period.

A comprehensive insider threat assessment uncovers malicious and unintentional risks within the organization, helping mitigate these often under-recognized threats.

Now that we’ve examined the types of risk assessments, the next logical step is to determine when they are most critical.

Also Read: Understanding What is a Risk-Based Approach

When to Perform a Risk Assessment?

There are specific times when conducting a risk assessment becomes especially critical:

• Before Rolling Out New Systems: Whenever you implement new technology, systems, or processes, a risk assessment is necessary to identify potential vulnerabilities. This helps address weaknesses and implement mitigations before the system goes live.
• Post-Security Incident: If your organization experiences a security breach or another security-related incident, conducting a risk assessment is essential to evaluate the effectiveness of your existing security measures. This helps uncover previously unknown vulnerabilities that may have been exposed during the incident.
• Periodic Assessments: Regular risk assessments (at least annually or annually) ensure that your organization stays current on emerging threats and vulnerabilities. This is particularly important in industries where cyber threats are constantly evolving.
• When Regulatory Requirements Change: Changes in laws or regulations affecting your industry necessitate an updated risk assessment to ensure compliance. This helps you avoid legal issues and ensures that your organization meets new compliance standards effectively.

Performing risk assessments at these crucial times helps maintain a strong security posture and mitigate the risks posed by emerging threats. This naturally leads to the next important consideration: which framework should guide your security risk assessment process?

What Security Risk Assessment Framework Should You Follow?

Choosing the right security risk assessment framework depends on your organization’s specific goals, resources, and industry needs. Here are some frameworks to consider:

1. CIS Top 18

The CIS Top 18 framework can be a solid starting point for a broad, general security assessment. This framework is useful for assessing your organization’s overall security posture and is especially beneficial for:

• Small to medium-sized businesses (SMBs)
• Companies with limited security budgets
• Organizations that need a straightforward approach to security

2. ISO 27001 or NIST 800-171

For more mature or well-funded organizations, frameworks like ISO 27001 or NIST 800-171 provide a more detailed and comprehensive approach. These frameworks are ideal for organizations with established security operations looking to build or enhance their security management systems. They offer a robust structure for:

• Identifying and managing information security risks
• Building a comprehensive security management system
• Aligning with international standards for cybersecurity

3. Industry-Specific Compliance Frameworks

If your main goal is compliance, you should consider frameworks tailored to your specific industry. For example:

• HIPAA Assessment: Healthcare organizations or companies handling protected health information (PHI) must adhere to HIPAA standards. The framework will focus on the unique security requirements for protecting patient data.
• PCI-DSS (Payment Card Industry Data Security Standard): E-commerce businesses or companies accepting online payments must assess their compliance with PCI-DSS, which ensures secure payment systems and protects cardholder data.

4. Cybersecurity Maturity Model Certification (CMMC)

CMMC is essential for defense contractors or government suppliers. The framework ensures compliance with cybersecurity requirements for entities working with the Department of Defense (DoD). CMMC is similar to NIST 800-171 but adds third-party auditing and certification, making it necessary for organizations that want to work with the U.S. government.

5. Considerations for Compliance

Even if your industry doesn’t have specific cybersecurity requirements, it’s still good to align your security practices with industry-recognized frameworks such as ISO 27001, NIST, or CIS. This can help ensure your organization follows best practices and stays ahead of evolving cybersecurity threats.

Now that we’ve explored various frameworks, we can move forward and examine how to conduct a security risk assessment in practice.

Also Read: Understanding Risk Remediation and Management in Cyber Security

How to Conduct a Security Risk Assessment?

Now that you understand the types of risk assessments and when to perform them, let’s look at how to conduct an effective security risk assessment.

1. Identify and Catalog Your Information Assets

Begin by listing all your valuable information assets, considering both digital and physical assets. Different departments may have varying priorities, so engage with all stakeholders to identify and classify assets based on sensitivity and strategic importance.

2. Identify Threats

Consider all possible threats to your organization, from cybercriminals to human errors and environmental factors. This broad approach will help you identify and address threats beyond the typical cybersecurity risks.

3. Identify Vulnerabilities

Next, assess your systems for vulnerabilities. Are your software patches up-to-date? Is customer data encrypted? Identify weaknesses that could expose your assets to attacks.

4. Analyze Internal Controls

Evaluate the security controls currently in place to mitigate vulnerabilities. These could include technical measures like firewalls or encryption and non-technical measures like employee training and policies.

5. Determine the Likelihood of an Incident

Assess the likelihood of each identified vulnerability being exploited. Consider your current security controls and the system’s exposure.

6. Assess the Impact of a Threat

Evaluate the potential impact of each risk, considering both quantitative (financial losses) and qualitative (customer trust, employee productivity) impacts on the organization.

7. Prioritize the Risks

Use a risk matrix to prioritize risks. The higher the likelihood and impact, the higher the priority for mitigation efforts.

8. Design Controls to Mitigate Risks

Design and implement controls to reduce or eliminate high-priority risks. Involve senior management and IT teams to align these controls with organizational goals.

9. Document the Results

Finally, compile a comprehensive report to communicate your findings to senior leadership. This document will help secure necessary resources and guide decision-making.

Certain pitfalls must be avoided when conducting a security risk assessment in an organization. Let’s explore these in the next section.

Common Pitfalls to Avoid When Performing a Security Risk Assessment

It’s important to be aware of common mistakes to ensure your security risk assessments are effective and comprehensive. Understanding the process can help you avoid these pitfalls.

1. Don’t Delay

Postponing the implementation of proper controls and remediation plans exposes your organization to potential attacks, breaches, and costly liabilities. Acting promptly is crucial to mitigating risks before they can escalate.

2. Don’t Get Tunnel Vision

A common mistake is focusing exclusively on electronic assets and neglecting physical threats and human risks. Security assessments should be holistic, addressing physical security, employee behavior, potential insider threats, and IT infrastructure.

3. Don’t Ignore Your Goals

The goals of your risk assessment shape the way you allocate resources. If you don’t define clear objectives, you may conduct broad assessments that lack focus, leading to inefficiencies and wasted resources. Always remember that your assessment goals must remain cost-effective and aligned with organizational needs.

4. Don’t Begin In the Middle

Avoid jumping straight into remediation without first understanding the scope of your risks. Effective risk mitigation requires a comprehensive inventory of your assets, data flows, and processes. A clear understanding of what needs protection is key to building a solid remediation plan.

5. Don’t Rely Solely on Automated Tools

While automated tools can be incredibly useful, they should not be the only basis for your risk assessments. Human expertise—both from internal security professionals and external consultants—is necessary to interpret the data accurately. Also, top-down support from leadership is essential to fostering a strong cybersecurity culture and ensuring effective employee training.

6. Don’t Do It Just Once

A one-time risk assessment is not enough. Security risks evolve over time, as do the threats posed by cybercriminals. Regular, ongoing assessments are critical to keeping up with emerging risks and continuously improving your security posture. Always treat risk assessments as an ongoing process.

By avoiding these common pitfalls, you can conduct more effective and impactful security risk assessments that safeguard your organization’s assets and help maintain a proactive security culture.

Collaborate with VComply for Security Risk Assessment

With VComply’s intuitive risk assessment features, teams across all business units can: 

• Document risks
• Link risks to controls
• Assess how well existing measures mitigate potential threats

This clarity helps your risk management, security assurance, and compliance teams focus on the risks that truly matter.

Using VComply’s powerful dashboard, you’ll get a real-time view of how your risks evolve. This will help you prioritize what needs attention and communicate potential exposure to executives. By streamlining your risk assessment process, you’ll protect your organization’s sensitive data and build trust with your customers.

Take control of your risk management and compliance objectives today. Request a demo to discover how VComply can help you track risk changes, prioritize key risks, and communicate effectively with leadership. Safeguard your organization and make data security a top priority.

Conclusion

An IT risk assessment clearly identifies your organization’s vulnerabilities and how to address them. Whether you’re dealing with financial, operational, or security concerns, following these steps will help you prioritize risks and bolster your defenses. Keep your risk assessment updated as your business and technology landscape change to stay one step ahead of potential threats.

Simplify your security risk assessments with VComply. The platform makes it easy for risk owners to document, update, and visualize risks, ensuring that leadership is always in the loop.

Request a free trial today!