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.
Definition of 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 sizable monetary losses in several ways.
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 email, phone, or social media to entice victims to share sensitive information such as bank account numbers or passwords. To prevent this, it is important to implement advanced email filtering solutions to block phishing emails, 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. 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. 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.
- 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. 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.
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.
- 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.
- NIST Risk Management Framework: This framework involves categorizing information systems, selecting and implementing security controls, and monitoring them for effectiveness.
- 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.
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. 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.
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.
