Nowadays, it is considered a necessity for most companies to embrace digitalization and technology tools to secure valuable data, meet market demands, and protect financial operations. Cybersecurity risk management comes into play by helping organizations’ security strategies, especially when it comes to protecting financial assets and minimizing the risk of cyber threats and fraudulent activities.
However, the importance of cybersecurity may not be as apparent for some businesses. If left without a robust cybersecurity risk management strategy, it can open your company up to system vulnerabilities.
Take Yahoo, for instance, which is one of the most infamous cases that dealt with a cyber attack that resulted in stolen records from 3 billion user accounts, including personally identifiable information. The massive cyber-attack resulted in a $35 million fine and 41 class-action lawsuits.
Yahoo isn’t the only tech company that has suffered from major cyber threats and attacks. In fact, cybercrime is predicted to cost the global economy a whopping US$10.5 trillion by 2025.
Cyber threats and attacks can happen to companies of all industries and sizes, and the financial impact can end up destroying businesses permanently. As such, cybersecurity risk management is essential to prevent such staggering financial losses.
Read on as we discuss everything you need to know about cybersecurity risk management, from the risks and implications down to the best practices your tech company can follow.
Understanding Cybersecurity Risk Management
Cybersecurity risk management is an approach to preventing and prioritizing cybersecurity threats and resolving related issues as soon as possible. Doing so will help companies identify, evaluate, address, and mitigate cyber threats, depending on their potential consequences. Typically, there are four stages involved in cybersecurity risk management, which are:
- Risk Identification – To determine any risks that can affect operations or financial data;
- Risk Assessment – To analyze identified risks and determine their potential short-term and long-term impact on business operations;
- Risk Control – To define procedures, tools, technologies, and other ways the business can mitigate such risks; and
- Control Review – To evaluate the effectiveness of the procedures and technologies used to mitigate risks.
Tech companies often handle vast amounts of sensitive financial data, both their own and that of their users. In order to avoid cyber attacks like that of Yahoo, effective cybersecurity measures will help protect data from unauthorized access or theft, which can prevent financial losses from hefty penalties, lawsuits, and potential loss of clients.
If left ignored, a lack of cybersecurity risk management can cause sizeable monetary losses in the form of:
- Direct Financial Losses: Cybercriminals may be able to steal a company’s financial data, using it for fraudulent transactions. They may also steal important data and hold it for ransom, demanding a large sum of money for companies to regain access to their systems.
- Regulatory Fines and Penalties: Failure to comply with data protection regulations may lead to hefty fines and penalties.
- Lawsuits and Legal Costs: If clients, partners, or shareholders are affected by a company’s data breach, it may result in lawsuits. Not only will companies potentially pay for settlements, but they will also need to spend time and money on a legal team.
- Loss of Business: Cybersecurity breaches can negatively affect a business’ reputation and customer trust, leading to a huge loss of existing and potential clients and, in the long run, revenue loss.
- Operational Downtime: Cyber-attacks can lead to downtime as systems may be unusable for an unknown period.
- Recovery Costs: Dealing with the aftermath of a cyber-attack will involve paying for incident response, forensic investigations, system recovery, and implementing new security measures.
A strong cybersecurity risk management strategy will ensure that plans and measures are in place to prevent and recover from imminent threats. That way, companies will experience business continuity and data protection, saving them significant time and money in the long run.
(Also Read: 5 Benefits of Concrete Cyber Security Risk Management Strategy)
Key Cyber Threats and Their Financial Implications
Cyber threats refer to any vector that can be exploited to cause damage or harm to a company or steal data. Here are some of the key cyber threats any tech company must watch out for:
-
Phishing Attacks
Phishing is a common cyber-attack that utilizes e-mail, phone, or social media to entice victims to share sensitive information such as bank account numbers or passwords. This type of cyber-attack may also have victims download malicious files that install viruses on their devices. An example is when cybercriminals impersonate a fellow employee and send an e-mail requesting wire transfers due to believable reasons.
To prevent this from happening, it is important to implement advanced email filtering solutions to block phishing e-mails, as well as to enforce Multi-Factor Authentication on all user accounts within the company, which adds an extra layer of security.
-
Ransomware
Ransomware involves encrypting and stealing a victim’s data and holding it ransom until payment is made. This type of cyber-attack can start from clicking on malicious links delivered from phishing e-mails or it can stem from system vulnerabilities as well. Anyone can be a victim of ransomware, such as the WannaCry ransomware attack in 2017, which affected over 200,000 computers around the world. The attack caused billions of dollars in damages, with the impact still felt to this day.
Companies can mitigate the risk and consequences of ransomware attacks by performing regular system and data backups, as well as regularly updating software to patch any vulnerabilities.
-
Insider Threats
Insider threats refer to current or former employees who can prompt cyber-attacks because of their direct access to their company’s sensitive data and network, as well as their knowledge of company policies, business operations, and other valuable information. Some employees may carry out such cyber-attacks with malicious intent and financial gain, while others may do it simply because of negligence. The possible repercussions include data theft, damage to IT systems, and unauthorized access to sensitive information, all of which result in significant financial losses.
Companies can combat these types of cyber-attacks by installing tools that monitor and analyze user activities for unusual behavior, as well as performing regular audits of user activities and access logs. It is also crucial to perform thorough background checks on new employees and to continuously provide security awareness training with regard to insider threats.
-
DDoS Attacks
Distributed Denial of Service (DDoS) attacks are an attempt to overwhelm a website, service, or network with a flood of Internet traffic so it becomes unavailable to use for legitimate users. This can give hackers control of the network to steal data or launch more cyber-attacks, causing significant financial loss from fraudulent activities. It can also lead to business downtime and increased costs related to mitigating the attack and restoring services.
Companies can prevent DDoS attacks from happening by utilizing reputable third-party DDoS mitigation services, as well as by implementing rate limiting and IP blacklisting to filter out suspicious website traffic.
Developing a Cybersecurity Risk Management Plan
We have broken down the development of a cybersecurity risk management plan into four simple steps:
-
Identify Cybersecurity Risks
Gather all identified cybersecurity risks based on your company’s data audit results. Afterward, classify the risks into different categories, including internal and external threats as well as operational risks.
-
Assess Cybersecurity Risks
Determine the potential impact of each risk on the company’s business operations. You can base such effects on factors like financial loss, reputational damage, business operations disruption, and non-compliance penalties.
-
Identify Possible Cybersecurity Risk Mitigation Measures
Develop and implement proper strategies that can mitigate the identified cyber risks, which can include enhancing security controls, using multi-factor authentication, and conducting regular data audits. Other ways of mitigating cybersecurity risks are continuously updating financial policies and providing specialized cybersecurity training to employees.
-
Use Ongoing Monitoring
Continue to monitor your financial data and the mitigation measures used to protect your assets from cyber threats. This will allow you to determine what is working and what requires improvement. Moreover, stay updated with industry best practices to identify new risks and how to prevent them before they happen to your company.
Cybersecurity Frameworks
There are various cyber frameworks companies can use to assess and improve their overall security, such as:
ISO 27001
The International Organization for Standardization, with the International Electrotechnical Commission, developed ISO-IEC 270001. It is one of the best-known standards for information security management systems in the world. From assembling an implementation team, creating an information security management system (ISMS), and having it certified, to continuous evaluation, the steps involved in implementing this cybersecurity framework can be meticulous and require further specialization.
-
NIST Cybersecurity Framework Version 1.1
This framework was established thanks to former US President Barack Obama’s executive order “Improving Critical Infrastructure Cybersecurity.” Adopting the NIST Cybersecurity Framework starts by thoroughly understanding its components, assessing your current cybersecurity practices, and identifying any gaps. While compliance is voluntary, this is considered the gold standard when it comes to assessing cybersecurity maturity and identifying any gaps in security.
-
NIST Risk Management Framework
This framework involves categorizing information systems, selecting and implementing security controls, and monitoring them for effectiveness. The NIST RMF is beneficial as it provides comprehensive coverage, addressing all factors related to information security. It also has a systematic approach to managing and mitigating cybersecurity risks, making sure security measures are integrated into business operations.
-
FAIR Framework
The Factor Analysis of Information Risk (FAIR) Framework is a quantitative framework made to help organizations assess and manage cyber risks by translating their impact into mathematical risk estimates. The benefit of utilizing the FAIR framework is that it allows companies to translate qualitative risk assessments into quantitative ones, giving them a clearer picture of financial consequences. This can improve the decision-making process when it comes to determining the best mitigation efforts.
Cybersecurity and Financial Asset Protection: Case Studies
One of the most popular risk management strategies goes out to Microsoft’s Zero Trust Model, which requires verification of every user, device, and application regardless of location. It emphasizes strict access controls and continuous monitoring. This model paved the way for Microsoft to further enhance its ability to protect its cloud services and internal infrastructure from cyber threats.
This model could have been beneficial to Sony Pictures, which was attacked by a group that stole sensitive corporate data in 2014. Such data included unreleased films, employee information, and internal communications. When adding an extra verification step for every user and rigorous access controls, sensitive data will be better secured, with fewer chances of unauthorized access to sensitive data.
Response and Recovery
While it is important to focus on preventative measures against cyber-attacks, it is also crucial to prepare a response and recovery plan in case data breaches happen. If ever a cyber attack occurs within your company, here are the steps to take:
- Assemble a response team and follow predefined procedures to contain the threat and limit its spread. During this time, you must notify relevant stakeholders and gather evidence related to the attack for analysis and legal action, if applicable.
- After the cyber-attack, identify all malicious software and vulnerabilities, then remove them immediately. Afterward, restore all affected systems and data from backups, making sure they are secure and fully patched.
- Once operations are back to normal, you can review and analyze the incident to know what can be improved in your cybersecurity strategy and to update the current response plan to further enhance your company’s preparation in case of future attacks.
It is also worth investing in cyber insurance since it can mitigate cyber incidents’ financial impact. This type of insurance can cover costs associated with cyber threats such as ransomware attacks and data breaches. It will also transfer some of the financial risks related to cybersecurity incidents from the company to the insurance provider, as well as provide support for recovery. This can save you more time and money in the long run compared to bearing the brunt of penalties, legal fees, and other costs on your own.
Innovations in Cybersecurity: Leveraging AI and Machine Learning
As cyber threats become more sophisticated, companies become more wary about how they can keep up. Fortunately, AI and Machine Learning are revolutionizing cybersecurity by enhancing threat detection and response capabilities. Such technologies can take large volumes of data and advanced algorithms to identify patterns and potential threats efficiently. Thanks to AI’s ability to analyze vast amounts of data in real time, companies can now quickly identify any suspicious activities and potential data breaches to shut down before they worsen.
Final Thoughts
In today’s modern digital landscape, protecting your company’s financial assets involves building a robust cybersecurity risk management strategy. While cyber threats are imminent and becoming more sophisticated, so is the technology associated with improving cybersecurity efforts.
As they say, an ounce of prevention is worth a pound of cure, which is why proactive risk management is a must to safeguard financial assets. When you anticipate and address vulnerabilities before they become exploited, you can reduce the risk of financial loss caused by hefty penalties, operational disruptions, client losses, and reputational damages. That way, you can focus more on growing your tech company than losing it to massive cyber-attacks.
Frequently Asked Questions Cybersecurity Risk Management
Q. How can tech companies ensure their cybersecurity measures comply with regulations?
A. Companies also need to think about maintaining compliance when improving their cybersecurity efforts. This can be done by staying informed about relevant regulations, including the GDPR, CCPA, and SOX. Regular compliance audits, as well as consulting with legal and cybersecurity experts, can help companies comply with current regulations and avoid penalties.
Q. How can tech companies that employ remote workers approach cybersecurity risks?
A. Addressing any cybersecurity risks with a remote work setup can be done by:
- Enforcing strong VPNs for remote employees to lessen the risk of security breaches or hacking.
- Implementing endpoint security to protect devices used by remote workers.
- Utilizing the Zero Trust Model, which involves the verification of every access request.
- Conducting regular security training to educate employees about security best practices even when working remotely.
Q. What should tech companies look for in a cyber insurance policy?
A. Tech companies should consider factors such as insurance coverage (data breach response, ransomware, business interruption, and the like), coverage limits, incident response services, exclusions and limitations, as well as the efficiency of the claims process and 24/7 customer support.
