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There were over 3,000 data breaches in 2023, and they affected more than 350 million consumers. In the same year, 2,700 businesses were hit by supply chain attacks, an increase of 2,600% compared to just five years ago. These alarming statistics highlight the growing importance of conducting an up-to-date risk assessment to protect your business against evolving threats. The purpose of this guide is to show you the advantages of different risk assessment methodologies and help you identify the right one for your needs.
Risk assessment involves analyzing your business operations, identifying potential threats and hazards, and laying out strategies to avoid or mitigate those risks. There are many ways to conduct a risk assessment, and each one takes a unique approach to calculating or prioritizing risks. In simple terms, a risk assessment methodology is the process you follow to perform the risk analysis.
In practice, most risk assessment methods reflect elements of qualitative, quantitative, or hybrid approaches, so it makes sense to start with these three.
The qualitative approach to risk assessment relies on your team’s professional experience and “gut feeling” instead of scientific measurements. After talking with stakeholders and putting together a list of potential risks, assessors give each risk a rough likelihood rating of “low,” “medium,” or “high.”
A qualitative methodology is much faster and easier to perform compared to time-intensive quantitative measurements. The qualitative approach is also better for looking at risks that are practically impossible to measure with hard data, such as decisions that involve the human element.
Quantitative risk assessment methodologies take a mathematical, scientific, and statistical approach to risk probabilities. To perform this type of assessment, you need concrete data — and lots of it.
Quantitative risk assessments are more precise, trustworthy, and persuasive, making them ideal for critical business decisions. Some compliance frameworks require or heavily “encourage” you to use quantitative methodologies, including NIST 800-53, ISO 27001, and SOX.
Also known as a semi-quantitative risk assessment, the hybrid methodology blends the strengths of qualitative and quantitative approaches:
This method involves creating a risk matrix using a numerical scale, such as 1 to 10 or 1 to 100. This matrix has the risk likelihood on one axis and the impact value on the other axis. Combining the factors helps your organization assign a priority rating to risks.
| Low impact(1-20) | Some impact (21-40) | Moderate impact (41-60) | High Impact (61-80) | Very high impact (81-100) | |
| Low risk (1-20) | Microsoft 365 vulnerability | Hacked email (IT admin) | |||
| Some risk (21-40) | Flooding (cloud storage) | Flooding (on-prem servers) | Building fire | ||
| Moderate risk (41-60) | IP theft by disgruntled employees | Hacked email (executive) | |||
| High risk (61-80) | Hacked email (junior employee) | Phishing attack | |||
| Very high risk (81-100) | Mobile device vulnerability |
The higher the total risk rating, the more urgent it is to take corrective actions or develop contingency plans to reduce risks. In the chart above, your organization would prioritize IT policies and tools for mobile endpoint security, email security practices, and restricting employee access to sensitive information.
You can use quantitative, hybrid, and qualitative risk assessment techniques to address specific business needs and circumstances.
Compliance-based assessment methodologies are helpful when your main business concerns relate to meeting and maintaining regulatory standards. Maintaining compliance is vital to continued operations for manufacturers with lucrative government contracts. Evaluating the risks and impacts of noncompliance plays a large role in GDPR, PCI DSS, HIPAA, and CMMC frameworks.
Dynamic risk assessments usually relate to business emergencies, emerging threats, go/no-go decisions, and unexpected situations. For example, if your system becomes compromised in a ransomware attack, you would use a dynamic assessment to weigh the risks and benefits of paying the ransom, restoring data from a backup, hiring a specialized IT firm, or similar options.
Generic risk assessments have a narrow scope, such as a single process or policy. They help you analyze likely risks in business operations before crafting effective procedures. You can apply generic assessments to everything from your mobile device policy to workplace injuries from forklifts.
Site-specific risk assessments analyze enterprise risks by location. Your cybersecurity risks are different with remote work teams compared to office personnel. Environmental and workplace risks (e.g., OSHA safety requirements) also vary depending on the location’s climate and the type of equipment present.
A risk-benefit analysis recognizes that zero risk isn’t always desirable, especially when it comes to business expansion. Making profitable decisions is often about balancing a certain level of risk tolerance with anticipated rewards. This assessment methodology can help you maximize your return on investment for new products, services, tools, and business locations.
A business needs assessment is similar to a gap analysis, but centered on risks and solutions. The goal is to identify where your organization needs to be versus where it is right now. This is helpful for complex systems and compliance frameworks, such as SOC 2 or ISO 27001. Using a platform such as Compyl makes it easier to fill cybersecurity gaps, track progress, and turn to automation to speed up compliance.
Cybersecurity risks affect companies of every size. The type of risk assessment you should choose depends on your industry, operations, and business location.
Also known as a root cause assessment, fault-tree methodologies can help you discover the contributing factors behind risks. For example, imagine that you discover a minor infiltration in your network, but the hacker wasn’t able to change administrator settings or access confidential documents. You wouldn’t let the matter rest there.
Your team would conduct a risk assessment to determine how the breach occurred, eliminating some vectors and centering attention on others. That way, you can prioritize the right actions to shore up your defenses and reduce vulnerabilities cost-effectively.
Use an asset-based risk assessment to evaluate cybersecurity risks based on your network, hardware, and software. This approach examines risk statistics connected with each asset and your current security controls.
Cloud software tools have different vulnerabilities than on-prem servers and require different priorities. For one, the most common failures are related to misconfigured security settings. For the other, regular security updates are more urgent.
Taking a vulnerability-based approach to risk assessment means looking at all of the cybersecurity risks present in your organization, including the human factor. You start with the known vulnerability (e.g., you can’t afford network monitoring services) and analyze potential risks that can exploit the vulnerability. From there, you can take mitigating actions (e.g., blocking all traffic from non-US IP addresses).
With a threat-based risk assessment methodology, you start by analyzing all risks related to a particular threat. In cybersecurity, common threats include:
To combat phishing attempts, actions such as employee training, zero-trust, and email analysis tools are key. For ransomware, offsite data backups, encryption, and high-quality antivirus tools should be a priority.
A centralized platform such as Compyl can help you implement risk assessment methodologies, track organizational and employee progress, and detect workflow vulnerabilities. Learn more about Compyl’s GRC compliance tools right away.
