An organization’s sensitive information is under constant threat. Identifying these security risks is critical to protecting that information. But some risks are greater than others. Some mitigation options are more expensive than others. How do you make the right decisions? Adopting a formal risk assessment process will give you the information you need to set your priorities.
There are many ways to perform a risk assessment, each with advantages and disadvantages. We can help you find which of these six risk assessment methods is best for your organization.
What is risk assessment?
A risk assessment is how an organization decides what to do in the face of today’s complex security environment. Threats and vulnerabilities are everywhere. They can originate from outside actors or careless users. They may also be built into your network infrastructure.
Decision makers need to understand the urgency of the organization’s risks and the costs of mitigation efforts. A risk assessment helps set these priorities. Evaluate the potential impact and likelihood of each risk. Decision makers can then assess which mitigation efforts to prioritize within the context of the organization’s strategy, budget, and timelines.
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Risk assessment methodology
Organizations can assess risk using several approaches, including quantitative, qualitative, semi-quantitative, asset-based, vulnerability-based, and threat-based. Each methodology can assess an organization’s risk posture, but each requires trade-offs.
quantitative
Quantitative methods bring analytical rigor to the process. Assets and risks receive dollar values. The resulting risk assessment can be presented in financial terms easily understood by senior management and board members. A cost-benefit analysis allows decision makers to prioritize mitigation options.
However, quantitative methodologies may not be suitable. Some assets or risks are not easily quantifiable. Forcing them to adopt this numerical approach requires judgment and undermines the objectivity of the evaluation.
Quantitative methods can also be very complex. Communicating results outside the conference room can be difficult. Additionally, some organizations do not have the necessary in-house expertise for quantitative risk assessment. Organizations often incur additional costs to bring in the technical and financial skills of consultants.
qualitative
Quantitative methods take a scientific approach to risk assessment, while qualitative methods take a more journalistic approach. Evaluators meet with people across the organization. Employees share how or if they will complete their work if the system goes offline. Raters use this input to classify risk on a coarse scale, such as high, medium, or low.
A qualitative risk assessment provides a general picture of how risks affect an organization’s operations.
People across the organization are more likely to understand qualitative risk assessment. On the other hand, these approaches are inherently subjective. The assessment team should create scenarios that can be easily explained, develop questions and interview methods that avoid bias, and interpret the results.
Prioritization of mitigation options can be difficult without a strong financial foundation on which to analyze cost-effectiveness.
semi-quantitative
Some organizations combine previous methodologies to produce semi-quantitative risk assessments. Using this approach, organizations assign numeric risk values using numeric scales such as 1-10 or 1-100. Risk items in the bottom third of the scores are grouped as low risk, the middle third as medium risk, and the top third as high risk.
By mixing quantitative and qualitative methodologies, it avoids the former’s powerful probability and asset value calculations while producing more analytical assessments than the latter. Semi-quantitative methodologies are more objective and can provide a sound basis for prioritization of risk items.
asset base
Organizations traditionally take an asset-based approach to assessing IT risk. Assets consist of the hardware, software, and networks that process an organization’s information, as well as the information itself. Asset-based valuations typically follow her four-step process:
- Inventory all assets.
- Assess the effectiveness of existing controls.
- Identify threats and vulnerabilities for each asset.
- Evaluate the potential impact of each risk.
The asset-based approach is popular because it aligns with the IT department structure, operations, and culture. Firewall risks and controls are easy to understand.
However, an asset-based approach cannot provide a complete risk assessment. Some risks are not part of our information infrastructure. Policies, processes, and other “soft” factors can expose your organization to as much risk as an unpatched firewall.
Vulnerability base
Vulnerability-based methodologies extend the scope of risk assessment beyond organizational assets. This process begins with an investigation of known weaknesses and deficiencies within organizational systems or the environments in which those systems operate.
From there, evaluators identify threats that could exploit these vulnerabilities and potential consequences of exploitation.
Coupling a vulnerability-based risk assessment with your organization’s vulnerability management process can demonstrate effective risk and vulnerability management processes.
While this approach captures more risk than a purely asset-based assessment, it is based on known vulnerabilities and cannot capture all the threats facing an organization.
threat base
Threat-based methods can provide a more complete assessment of an organization’s overall risk posture. This approach evaluates the conditions that create risk. Asset audits are part of the assessment, as assets and their management contribute to these conditions.
A threat-based approach looks beyond the physical infrastructure.
For example, an assessment could change the priority of mitigation options by evaluating the techniques used by threat actors. Cybersecurity training mitigates social engineering attacks. Asset-based appraisals may prioritize systematic management over employee training. Threat-based assessments, on the other hand, may find that more frequent cybersecurity training reduces risk at a lower cost.
Choosing the Right Methodology
None of these methodologies are perfect. Each has advantages and disadvantages. Fortunately, nothing is mutually exclusive. Whether intentional or circumstantial, organizations often perform risk assessments that combine these approaches.
The methodology you use when designing your risk assessment process depends on what you need to achieve and the nature of your organization.
Where board-level and executive approval are the most important criteria, the approach leans towards quantitative methods. A more qualitative approach may be more appropriate if you need support from your employees and other stakeholders. While asset-based assessments work naturally with IT organizations, threat-based assessments address today’s complex cybersecurity landscape.
Constantly assessing your organization’s risk exposure is the only way to protect sensitive information from today’s cyberthreats. Drata’s compliance automation platform monitors security controls to ensure they are audit-ready.
Schedule a demo today and see what Drata can do for you!
