How To Conduct an Information Security Risk Assessment

Small-to-midsize-businesses (SMBs) leverage the internet to reach global customers or deploy remote workforces. However, increasing digital security risks often challenge their online operations. As hackers and cybercriminals constantly update their techniques to steal crucial business data, SMB leaders without dedicated cybersecurity teams are more vulnerable to data breaches.

A formal risk assessment process can help SMBs identify vulnerabilities and analyze their security weaknesses before they are exploited. Getting started can be daunting, though. This guide will help you know how to conduct a security assessment and list the best practices you could adopt to keep your business safe.

A security risk assessment is a documented process that evaluates an organization's cybersecurity controls. The goal is to assess the security controls for hardware, software, and other systems. Vulnerabilities are identified and assigned a risk score based on how they might impact business operations.​

Why are security risk assessments important?

Security risk assessments are an essential activity for any business because:

• Help identify potential threats before they can be exploited.

• Help craft incident response plans, making you better prepared to deal with a potential data breach.

• Provide evidence of compliance if your business falls under cybersecurity regulations.

• Build customer loyalty by signaling stakeholders and prospects that your business is serious about maintaining information security.

More and more businesses have started to recognize the importance of risk assessments. According to GetApp’s 2023 Data Security Survey*, IT security spending is up by 70% at all businesses, and only 1% are spending less than the year before. Clearly, cybersecurity is more important than ever. Risk assessments are the best way to gauge how well your business handles security.

There are multiple types of security assessments, but it is crucial to know which one is right for you. 

1. Security risk assessment (SRA)

The primary goal of an SRA is to identify, analyze, and prioritize potential security risks within your organization's information systems and procedures. With an SRA, you can evaluate potential vulnerabilities in your password policies, access controls, and applications. You can also check how external attackers might breach your network.

2. Vulnerability assessment (VA)

A vulnerability assessment is a more advanced evaluation using automated tools to scan your network, applications, and other systems for known weaknesses. These tools pinpoint standard security holes, such as outdated software, security misconfigurations, and unpatched vulnerabilities.

Vulnerability assessments provide a comprehensive picture of technical weaknesses. Issues uncovered in a VA are typically resolved through security patches and corrective actions. This approach is equally well-suited for finding internal and external threats.

3. Vulnerability management (VM)

Many companies take the lessons learned from vulnerability assessments and incorporate vulnerability management into their everyday routine. In the Gartner report, A Guidance Framework for Developing and Implementing Vulnerability Management, analyst Steve Santos notes a trend of organizations with VM programs that "leverage advanced prioritization techniques and automated workflow tools to streamline the handover to the team responsible for remediation." [1]

4. Penetration testing

Penetration testing, also known as pen testing, simulates real-world cyberattack scenarios. The goal is to discover vulnerabilities and gain unauthorized access to your systems. Pen testing exposes weaknesses before a malicious actor can exploit them.

While this security assessment type focuses on external threats, it can also be used to gauge internal threat risks. For example, you could test the security protecting your most sensitive internal data, such as financial information and employee records.

5. Security audit

A security audit compares your organization's access controls against security regulations or another predefined set of standards.

Security audits verify the policies, procedures, and technical measures that protect your data. Just as a financial audit validates your accounting policies, a security audit confirms your adherence to cybersecurity regulations and customer requirements.

Each type of assessment has value, but which one is right for your business? To answer that question, you should consider the following.

• Check for relevant security compliance regulations: Every business may have to comply with different security regulations based on its industry. For example, healthcare industry professionals must comply with the Health Insurance Portability and Accountability Act (HIPAA). Hence, the first step to choosing the right risk assessment for your business is to conduct a security audit around your compliance with HIPAA rules. 

• Check your business’s risk tolerance: Businesses that handle highly sensitive data often have a lower risk tolerance. Pen testing is a good fit if your business also has to deal with such data. On the other hand, if employee data controls are more important to you, you can choose a vulnerability assessment that focuses on internal threats.

Our Data Security Survey shows that more companies are concerned about internal threats. Only 16% of companies surveyed allow employees access to all company data, a sharp drop of 50% from the prior year.

Budgetary constraints can also help you choose an assessment. A broad SRA is generally less expensive than a pen test or vulnerability assessment since it doesn't require specific tools. Plus, general SRAs are suitable for organizations taking their first steps into cybersecurity.

New security vulnerabilities are discovered regularly, and attackers develop increasingly sophisticated techniques to take advantage of those vulnerabilities. Hence, it is crucial to perform periodic security assessments. The question is, how often should you be conducting these checks?

• Conduct a risk assessment: You should conduct an assessment at least once a year. Review your business and industry's specifics again to determine if more are needed. If you must comply with regulations, there's likely a recommended schedule.

• Analyze your risk tolerance: Knowing your business’s risk tolerance scope can also help determine the right assessment schedule. For example, a more frequent schedule, like quarterly assessments, might work for someone with a low-risk tolerance. An annual assessment might be adequate for others.

• Enhance the value of business security: Instead of focusing on your assessment frequency, make security a core component of your company culture. Take what you learn from your first assessment and conduct security awareness training for your staff. GetApp’s Data Security Survey finds that the number of businesses that provide security awareness training every six months has more than doubled over the last four years.

• Update data and devise an incident response plan: Instead of conducting repeated assessments, you should keep information secure and updated. Your IT team can lead the way by maintaining a consistent patch and update schedule. An incident response plan, based on the findings of your assessments, helps ensure readiness in case of a security breach.

While many organizations hire outside experts to perform security risk assessments, it is something you can manage with internal resources. Here are the key steps involved in the process:

• Define the scope: Identify the systems, processes, and facilities to audit.

• Identify threats: Perform tests according to the type of assessment, such as a pen test or a VA.

• Analyze risks: For any vulnerabilities you uncover, evaluate the probability of exploitation. Define the damage this exploit could cause.

• Prioritize vulnerabilities: After evaluating threats and their potential impact, rank them by priority.

• Risk mitigation: Develop risk mitigation strategies for the most critical vulnerabilities.

• Document your findings: Compile a report that outlines your findings and provides an action plan.

Most of the steps in a security assessment are straightforward. But if you're new to the process, it may not be clear how to identify and prioritize vulnerabilities. In such cases, some cybersecurity expertise can help, especially if you don't know what you're looking for.

Fortunately, some apps can guide you through the process. In particular, network, web application, and database vulnerability scanners are used to identify known threats. They compare your configurations and software versions against databases of known vulnerabilities, highlighting potential security holes.

Security scanners typically generate reports that list identified vulnerabilities. Some will help you prioritize the threats. However, it is important to keep in mind that a scanner’s priority may not match the realities of your business.

Also, consider a vulnerability's specific impact on your organization before relying on an automated tool. Prioritize vulnerabilities that are frequently exploited by attackers who target your industry. This may require research, but it will benefit you in the long run. Understanding the most severe threats your business faces will also help you with the prioritization process.

If you choose to hire an outside cybersecurity firm for your security assessment needs, you can expect to pay thousands of dollars at minimum—perhaps $10,000 or more.

Assessing with your internal IT team and other staff can save that expense. However, the indirect cost of pulling your employees off their regular duties remains. They may fall behind on their everyday tasks and other ongoing projects. In addition, you may have to spend money on software tools to help you through the process.

Ultimately, your budgetary constraints will likely decide which path you take. The important thing is that your company does the assessment. Just one security breach can have a significant cost: the potential loss of money, proprietary data, and industry reputation.

Whether you choose outside help or create your own security risk assessment process, you can ensure that your company's time and money are well spent. Follow these best practices for a successful and productive assessment:

Follow industry standards

Tailoring your assessment to your company will ensure the process is relevant and helpful. Before starting your assessment, research your industry's relevant security audit standards. For example, if you're in the finance sector, pay special attention to your accounting and banking applications. As mentioned above, if you operate in the healthcare industry, you must audit your HIPAA practices.

Define clear objectives

Should your assessment identify critical vulnerabilities? Or is showing regulatory compliance more important to you? Do your customers require documentation of your cybersecurity practices? These are the types of questions that should be answered ahead of time. By clearly defining the objectives, you'll get your assessment off to the right start.

Engage with key stakeholders

Maintaining a strong security posture is only possible if everyone's on the same page. Engage the key stakeholders across your company's affected departments—IT, accounting, manufacturing, and others. Ensure that high-level managers understand security's importance and that they support the assessment.

Define risk thresholds

Any assessment will likely uncover multiple vulnerabilities. That's just the nature of working in today's digital world. Once you have a list of all potential threats, your instinct will be to fix them all. Depending on the resources available to you, that may not be possible. According to the Gartner report mentioned earlier, "Organizations cannot immediately fix every vulnerability that is identified during the VA process. Applying prioritization criteria is crucial to obtain the best risk reduction in the shortest time period."

Some vulnerabilities present little danger, even if a hacker does attack them. Set thresholds for the amount of risk you're willing to bear so you can focus on mitigation activities that will have the most impact.

Implement continuous monitoring

Quarterly or annual risk assessments are necessary, but they can't be the only time security becomes a priority. Once you identify your organization's greatest vulnerabilities, take steps to address them throughout the year.

Security applications like network monitors and log analysis tools can monitor critical tools and systems year-round. Many of these apps are now powered by artificial intelligence, with improved capabilities and fewer false flags. Our survey found that most security pros welcome this development, with 59% of IT security managers saying AI does more to help prevent attacks than it does to launch them.

The ideal security risk assessment is whatever your business needs it to be. Data security might be paramount in your industry, or an impenetrable network protecting precious intellectual property might be your top priority.

Security assessments should focus on your most important tools and processes, ensuring they are safe from increasingly sophisticated hackers. That's why it's important to get started with security assessments as soon as possible. Implementing an effective security plan can save your company from an expensive disaster in the future.