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Cyber risk is the possible exposure to harm originating from a firm’s communications or information systems. Data infringements and cyber-attacks are among the most commonly reported cases of cyber risks. However, cyber risks go beyond data or financial loss and comprise intellectual property theft, reputational harm, and productivity loss.

Cyber risk as a business priority has grown significantly in the past few years with companies increasingly allocating more funds towards combating cyber threats. As per the 2019 Global Risk Perception Survey, cyber risk was classified among the top five priorities by 79% of the global firms.

The evolution of cyber risk has been triggered largely due to the rising use of innovative technology. Key initiatives like the use of third-party suppliers, outsourcing, cloud migration, remote access, and mobile technologies are enhancing efficiency and pushing growth, but at the same time, these are also increasing risk exposure. It has developed from a technology concern to a business issue.

The exponential growth of cybercrime is a factor that has intensified in the last twenty years. As per the Federal Bureau of Investigation’s cybercrime reporting unit, financial losses from reported incidents of cybercrime amounted to $3.5 billion in 2019.

Key Cyber Risk Challenges

The challenges faced by businesses today is to take preemptive action before any threats take advantage of the system. There have been several instances of cyber-attacks such as the Air India cyber-attack in which India's national airline was hit by a breach on its data servers that affected about 4.5 million customers worldwide. The attack compromised customer details including passport and ticket information as well as credit-card data. So, it is not just the financial or reputational loss that is the concern but the danger that firms can even go bust after enduring the consequences. Here is a list of some of the key cyber risk challenges:

1. Lack of visibility: A majority of security professionals are apprehensive about ransomware and phishing attacks. Limited visibility of such attacks and the burden of being flooded with several alerts to act upon are further substantial concerns. The lack of visibility has triggered many challenges for businesses. For instance, how are they supposed to resist threats that they do not even know about? What businesses need are solutions that operationalize threat intelligence and provide real-time protection and several layers of security from recognized bad locations. They must have access to solutions that can spot an array of cyber threats and offer better visibility of risks pertinent to their industry.

2. Prioritizing cyber risks: Handling growing cyber threats can be overwhelming. The possibility of a failure is well known, but businesses never seem to have a sufficient workforce or financial plan to manage it all in real-time. What do you do first? In today’s rapidly growing threat vectors and cyberattacks, no one can endure without having a proper risk prioritization plan in place. A key driver in determining the priorities is to stay agile in the face of swiftly changing cyber threats, business conditions, company goals, and technology defences.

Cyber risk prioritization has to be evaluated in a big-picture framework, tied to key business objectives, and considered against a credible danger-versus-resources assessment. Of course, that is done at the top, possibly with substantial input from the board, and it must be conveyed clearly to all stakeholders.

3. Communicating cyber risks to the board and management: Chief Information Security Officers (CISO) often find it hard to express the significance of security to the top leadership and validate further investments for their endeavors, regardless of how crucial they are. It is tough to instill the principles of security into the larger business model, even if they are key to reduce the risk of incidents, such as damaging data breaches.

The ability to show how security initiatives can help the business slash time and reduce costs on certain processes is an ideal way to show your department’s competence. It is particularly crucial when CISOs are asking for the allocation of more budget. To support the argument, it is recommended to have a metrics-heavy dialogue.

4. Sophisticated ransomware: Ransomware attacks are rising daily, and business leaders and IT professionals need to have a robust recovery strategy against such attacks to protect their business. There have been several submissions about the advancement of ransomware and the wait-and-watch game between fraudsters who are seeking ways to get around detection abilities and guards looking for ways to thwart them. Rather than arbitrarily encrypting data, offenders are focusing on high-value business data to encrypt and hold to ransom.

The recent Digital Defense Report by Microsoft has taken a profound look into cybercrime trends, applying its expertise and insights into enterprise, server, desktop and cloud networks. The report mentions ransomware as the most troublesome threat, and the most widespread reason behind its own incident response engagements. The report shows that the threat actors have devoted less time within a system once they have got access to it. They have taken advantage of the turmoil caused by the COVID-19 pandemic and initiated attacks much sooner.

5. Cloud risks: Businesses are relocating their classified data to the cloud from legacy data centres, because of the cost and flexibility involved in legacy data centres. Shifting data to the cloud requires appropriate configuration and security procedures in place or else there is a possibility of businesses falling into a trap. Cloud service providers secure only their own platform. The responsibility of securing a firm’s infrastructure from theft & deletion on the cloud lies with the firm. Current incident response teams must have the necessary skills and tools to perform forensics on cloud data. Leaders must challenge their teams on their preparation and capability to supervise and act in response to security attacks in the cloud.

6. Staff and skills shortage: Cyber risks today have become more sophisticated than ever, and this has triggered a steady pattern of relying too much on point products to shield against threats. While technology is key to this objective, it is not a standalone answer. Often, mid-market firms lack devoted cybersecurity personnel that are just as important. This skill shortage has been exacerbated by the pandemic as the network graph has broadened to include at-home laptops and other WFH access points. According to a report by Verizon, almost one in three data infringements in 2020 involved small firms, and the situation will improve only with a combination of processes, people, and technology. Hiring more security specialists together with outsourced professionals is the only way forward.

7. Perpetually evolving risks: The polymorphism particularly with respect to malware is something that you cannot do much about. Polymorphic malware is dangerous, damaging computer software such as a virus, worm, or spyware. It can change its form frequently, making it tough for anti-malware programs to identify it. That is why companies must consider adding an additional layer of protection, on top of the antivirus tool.

A company’s first line of security cover must be a product that can act proactively to pinpoint malware. It must have the ability to block access to malevolent servers and stem data leakage. Part of this protective layer’s role is to keep your system safe by patching susceptibilities fast. As cyber risks grow, and cyber-attacks become more hostile and extreme measures could become the norm.

The susceptibility to cyberattacks will grow if billions of hackable smart devices are attached to an IoT network. Today the IoT devices market is not standardized and therefore not obligated to fulfil certain security requirements, despite instances of cyberattacks. It is thus essential that IoT devices are shielded from the beginning to protect personal data, business-sensitive information, and critical infrastructure.

According to the 2019 Brookings report, 5G networks are more vulnerable to cyberattacks than their antecedents because the network has moved from an integrated, hardware-based switching to distributed, software-specified digital routing and the remarkable expansion of bandwidth in 5G builds additional possibilities of attack.

 

Instances of Cyber Risk

All businesses are vulnerable to cyber risk and threats can even originate from inside a firm (internal risk) or from outside (external risk). Both these risks can be inadvertent or malicious.

Internal risks are initiated by employees within the company. Data theft and systems disruptions are examples of malevolent internal cyber risk, which is often carried out by a frustrated employee.

External risks originate from outside the company. Some common examples of an external malevolent attack include data infringement by an external firm, installation of a virus. An accidental external attack typically originates from third parties or partners who are not from the same company but linked to the company in some way. For example, a supplier whose systems outage triggering a disruption.
 

Traditional Approach to IT & Cyber Risk Management

The traditional approach to cyber risk offered businesses more control over how systems are being used daily. It gave them the ability to see where and how data is regulated and being involved in its day-to-day management. However, the biggest weakness of the traditional approach is that it is costly to install and maintain. Here are the three major steps involved:

1. Identifying cyber risks: This approach is based on identifying assets and their risks and vulnerabilities. A list is prepared of each and then measures are taken to identify how a vulnerability in a system allows an attacker to threaten one or more of company assets.

2. Protection from cyber risks: Companies need to be more cyber resilient that will protect them from all major cyber risks and prevent loss of revenues, unforeseen costs, business downtime, and legal liabilities that come with a cyber infringement. Effective cyber resilience enhances the reputation of a business and its brand image.

3. Preventing cyber risks: Businesses, whether small or large can become a target of a cyber-attack. It is thus essential that businesses take preventative measures and adopt a serious-minded approach to cyber threats to help minimize risk. Some of these measures include managing user privileges, ensuring systematic information risk and incident management, providing an extra layer of protection for critical transactions, and more.

Modern Approach to Cyber Risk Management

Today’s continuously advancing threat landscape means firms face the challenge of eradicating millions of possible vulnerabilities that could provide an entry point for fraudsters. The situation requires a modern approach to cyber risk management that involves the following steps:

1. Defining risk in the cyber security framework: For professionals dealing in cyber risks, defining the boundaries of what signifies risk must go beyond simply evaluating the likelihood of an event taking place. It also must assess the scale of impact to the business should the event actually take place.

2. Determining the scale, criticality, and outcomes of risk: Professionals dealing with cyber risks should assess the scale of impact concerning their own operating circumstances. Making practical judgements depends on recognizing the criticality and outcomes of an event taking place in a specific environment. Cyber risk experts should also have the ability to quickly rate and prioritize weaknesses of their company to generate actionable risk scores.

3. A data-driven approach to cyber risk: ppropriate insights, it is difficult to take a rational approach to control risk. A modern data-driven approach to manage vulnerability is needed that allows security teams to assess risk.

Metricstream’s cyber risk management solutions adopt a simplified and business-focused approach to IT risk management and alleviation. The solution defines and maintains data on IT risks using industry standard IT risk assessment frameworks. Our products recognize, evaluate, mitigate, and observe IT vendor risks. They speed up informed decision-making by leveraging potent reports, analytics, and dashboards.

Frequently Asked Questions

A huge cybersecurity threat can dissipate millions of dollars in holdings and destroy a company’s standing. As concerns around cyber risks grow, businesses must be ready for the unavoidable cyber-attacks with robust safeguards to detect infringements and curtail damage. But how can a management understand where to put their money in cybersecurity? What should be ranked as a higher priority? How much is at risk? The solution lies in Cyber Risk Quantification (CRQ). Here’s how cyber risk quantification helps:

1. CRQ operates highly scrutinized and industry-leading probabilistic models to accurately portray the technology-based and cybersecurity risks facing a business.

2. By putting money on Cyber Risk Quantification, firms can attain cyber maturity sooner than their competitors, and develop trust with clients and partners.

3. All elements of a cyber security plan that include people, guidelines, procedures, and technologies impact the scale and probability of an attack. It is important to recognize the impact of each element for robust resource allocation and risk management. Only quantification of cyber risks can help businesses understand the accurate impact of each aspect and value to be gained from cyber security investments.

A strong cyber security plan protects firms from cyberattacks and works as a competitive advantage for them. Taking into consideration the financial impact of cyber infringements and regulatory fines, businesses must have a superior way to measure and articulate the impact of a cyber breach.

At MetricStream, we are at the forefront in quantifying cyber risk. We leverage SMEs such as asset owners technical experts, and business users who may not have been formerly involved in cyber risk evaluations. While using data available to these SMEs, we collect data more quickly and make more precise measurements for each element within an allotted risk and help in creating a holistic cyber security plan.

Considering the rate at which technology is changing, this is a difficult question to answer. But for people who are investing in these modern technologies and the risk surrounding them either overseeing or covering the risk, these investments must be made not just with a 12-month period, but with an estimate that spreads over the next five or ten years. Here’s what the future could like:

1. Digital tools are shepherding in a new age and pushing transformative shifts across industries and managing new risks linked to digital transformation will help companies obtain more value from their endeavors in the future.

2. Working remotely has left companies prone to attacks by cyber criminals, manipulating weakened security during the COVID-19 pandemic and they must build capabilities to enable people to work in such environments effortlessly in the foreseeable future.

3. Acknowledging how the changed environment can be employed to risk management will allow businesses to take a more balanced view of digital tools as a source of risk and a way to cope with risk.

4. The beneficiaries in this new age will be the firms that can incorporate these new technologies, taking advantage of the enormous benefits they offer – but at the same time controlling the increased risks posed by digital innovation.

As there is no way to safeguard a business completely from cyber risks, businesses must be prepared in the event of an infringement. Ensure all stakeholders understand precisely what they must do and when, and that they have the expertise and means in place to accomplish it. Preparedness for a cyber disruption is eventually in the hands of various stakeholders, from cybersecurity leaders to the board of directors. The industry must be mindful of whether they have set the objectives properly, priced the risk accurately and branched out their cyber exposure.

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