What is Cyber Risk Management?

In its 2024 annual report, the NCSC reported 1,957 reports of cyber attacks covering a range of sectors. 430 of those incidents required support from their incident management team, an increase on the 371 from the previous year. 89 of these incidents were nationally significant, with 12 at the top end of the severity scale (a three-fold increase on 2023).

The costs and impact of getting it wrong can be hugely significant; cybercrime (fraud) is now the third largest economy globally, only behind the USA and China, and worth more than 10 trillion dollars, according to the World Economic Forum. It’s little wonder then, that cyber risk features so prominently on the agendas of business leaders’ worldwide.

So, what is Cyber Risk Management?

Cyber risk management is a business risk and the process of identifying, assessing, and mitigating your cyber security threats.

The purpose being to identify credible threats, the potential impact or likelihood of their occurrence, and the means to mitigate, or decide what to do about those threats.

Organisations that implement robust cyber risk management processes experience less cyber security incidents, and when they do, they invariably have a lower impact. Cyber risk management is really about providing key information in order to make prioritised, risk based decisions.

With cyber incidents and disruption becoming increasingly common, and attacks more complex, it underlines the importance of effective cyber risk management.

What are the Five Core Stages of Cyber Risk Management?

The five core stages of Cyber Risk Management are listed below, along with an outline of key steps for each stage.

1. Identify 

• Develop a complete picture of your organisational digital assets and environment.
• Build an inventory of your hardware and software assets, sensitive data and critical systems.
• Define your roles and responsibilities for cybersecurity.

2. Assess

• Conduct risk assessments and threat modelling exercises to understand the likelihood and impact of cyber threats to your business.
• Evaluated your current controls and identify gaps.
• Understand your priorities and plan to address them.

3. Mitigation/Risk Treatment 

• Implement technical, physical and procedural controls to manage risk.
• Patch vulnerabilities.
• Improve technical configuration standards.

4. Monitoring and Review 

• Perform ongoing monitoring, tracking of threats and risks.
• Continually review the effectiveness of your security controls.
• Monitor user behaviour and network traffic.
• Perform penetration testing and review compliance with policies and procedures.

5. Respond/Recover

• Develop, model, and thoroughly test your cyber incident management response and communication plans.
• Test your backup and restore processes.
• Document and apply lessons learned.

How to Implement an effective Cyber Risk Management Strategy

Internal and external factors, such as the regulatory or legal environment your business operates in, any financial constraints, and your business maturity, will influence the  implementation of your cyber risk strategy, but one of the keys to success is by creating, embedding and fostering the right culture and environment to be successful.

1. Establish your organisational and business context.

Cyber risk management serves to protect and enable businesses and organisations to operate, grow, and thrive. Establishing business context is therefore an important and essential first step.

Consider your business mission and purpose. What are your primary functions, priorities, and goals? What are your critical assets? What compliance, legal or regulatory environment do you operate in?

2. Identify decision makers, governance processes and constraints.

As cyber risk is a business risk, ensuring you have buy-in and leadership support is essential. Identify those individuals within the business with decision making authority and align your cyber risk management processes according to your organisations’ risk appetite.

We all work within constraints – whether that’s financial, time, resources etc; understand the constraints you are operating in and ensure that these are understood and agreed.

3. Define your cyber security risk challenges.

We all operate in different sectors and industries and face different challenges. Consider your key threats and vulnerabilities and the potential impact these could have on your business and prioritise them accordingly.

Everyone has a role to play in identifying risks and keeping the business safe, so broad business engagement and communication is key.

4. Select an approach.

Select an approach to manage and reduce risks to an acceptable level. This will require a layered and tailored approach with different controls working together, such as software patching, policy enforcement, training, education, and user awareness.

5. Understand risks and how to manage them.

Once you have identified an approach, this should be implemented and operationalised across your systems and processes. Define a secure baseline to work from and, wherever possible, use automation to effectively control and manage them.

6. Review and assess your controls.

Once implemented, you need to understand how effective your controls are; are they working and driving the desired outcomes for your business? Are they proportionate to the risks you face? Review and assess them and ensure they remain fit for purpose.

7. Obtain approval.

Request formal sign-off and approval for cyber risks and risk treatment plans from the recognised and appropriate person within your organisation. Review these regularly and ensure you have the appropriate approvals in place.

8. Continuously monitor.

In a rapidly evolving and dynamic environment, it is essential to continuously monitor the efficacy of your controls. Implement a continuous monitoring strategy (for example, for vulnerabilities within your supply chain) and supporting metrics to monitor their performance and effectiveness over time and adjust accordingly.

9. Plan for when things go wrong.

Despite our best efforts, inevitably, something goes wrong; thorough, realistic, and detailed planning and testing for the worst-case scenario is a pragmatic and effective way of checking your readiness.

Review and apply lessons learned to ensure your plans and procedures remain effective and that roles and responsibilities are clearly documented and understood

The Future of Cyber Risk

Sadly, due to growing uncertainty in the world, combined with a broadening threat landscape, the future is highly unpredictable. Disruptions will likely become more common place and impactful in all areas of society.

Expectations are that risks from AI, and a proliferation of commercially available cyber tools, will have a widening impact on more business, industries, and sectors, so the need to stay protected and prepared could not be more important.

Communicating cyber risk in meaningful terms to business stakeholders can be difficult, so adopting cyber risk quantification techniques that explain risk in financial costs, downtime, or likelihood of occurrence can be a helpful way of overcoming this challenge.

Quantitative risk standards, such as FAIR, are compatible with other standards, tools, or frameworks, such as ISO27005 or the NIST cybersecurity framework.

Whilst we cannot fully predict and control the future, having a robust and well considered approach to cyber risk is something you can control. Contact the Bridewell team to take the right steps on your journey.