Recently, there has been a massive increase in threat volume and sophistication, as many hackers adopt tactics to evade detection and efficiently carry out high-value attacks. Our recent study of breach events between 2012 and 2021 reported an over 10x increase in in malicious activity just during the years of the study.

In addition, IoT (Internet of Things) devices are also becoming a primary focus for threat actors, and cyber threats related to ransomware and credential harvesting are becoming more common. Further, some hackers are moving their infrastructure into the cloud, hoping to blend in with legitimate services. 

These trends show an obvious need for a robust cybersecurity risk reduction strategy; otherwise, your company risks lagging behind the sophisticated attacks from today's risk landscape. Let's look at the importance of risk reduction and how to take preventive cybersecurity measures. 

What Is the Purpose of Risk Reduction?

Reducing risk is critical in today's rapidly evolving cyber threat landscape., Especially since organizations both large and small are susceptible to risks and potential data breaches. 

Cyber attacks on unprepared businesses can impact an organization in a variety of ways including; financial impact, loss of morale among employees, and brand reputation. Preventing cybersecurity attacks by installing anti-virus software is no longer enough to limit attacks. Anti-virus is just one aspect of risk reduction. 

Thus, organizations must establish and implement effective risk reduction measures to mitigate the risks specific to their industry and to help decrease cybersecurity threats. An effective cyber risk reduction strategy can help businesses to understand potential threats, which also can help them allocate time and money in the right places. Conducting a risk assessment can also help prevent the potential and actual. 

Other reasons why reducing risk matters include:

  • Reducing costs and protecting business revenue: Often, financial gain is the motive of most cybercriminals. Thus, any company can be attacked. A cyber risk reduction strategy can help limit risks and mitigate the loss of revenue. 
  • Improving company reputation: Prioritizing customers' data protection can  enable you to gain their trust. Thus, increasing customer loyalty and long-term business success. Unfortunately, many companies have weaknesses in their cybersecurity strategy. 
  • Adhering to regulation and compliance: Companies must comply with various compliance regulations, depending on their industry such as GDPR and PCI: DSS compliance. Also, they should develop a risk reduction plan for cybersecurity based on their vulnerabilities. Therefore, a risk reduction strategy can help you determine the risks you must address and the regulations you must adhere to. 

What Are the Components of Risk Management?

For risk management to be successful, it must be well-structured, cross-organizational, systematic, and collaborative. There are many ways to categorize a successful risk management process's constituent components, but at the very least, it must have the following elements: 

Risk Identification

This process entails documenting potential risks and categorizing an organization's actual risks. The totality of existing and potential threats is referred to as the risk universe. Identifying all potential risks systematically is crucial because it reduces the possibility of missing potential sources of risks. 

Working with not yet identified risk, you must consider the current and future risks that might emerge. As businesses reconfigure and technology advances, the risk universe advances, too. 

Risk Analysis

After identifying potential and actual risks, the next step involves analyzing their possibility and potential impact. How exposed is an organization to certain risks? A company may divide risks into "minor," "moderate," "serious," "low," "medium," or "high," depending on the potential for disruption. Risk analysis helps organizations prioritize risk mitigation. 

Response Planning

This step answers the question: What should we do about it? For instance, if you realize that your company is vulnerable to phishing attacks during risk identification and analysis because your employees are unaware of best security practices, you may respond by implementing security awareness training. 

Risk Mitigation

This step entails the implementation of the response plan. It's the action your organization and its staff take to reduce risk exposure. From the previous example, the implementation may entail the creation of onboarding materials to educate your employees and executing securing awareness training. Your company must also design controls that reduce identified risk levels to appropriate levels. Finally, you must test these security controls to ensure they're well-designed and work effectively. 

Risk Monitoring

Risks aren't static; they evolve over time. The potential impact and possibility of occurrence also change. What was once deemed a minor risk could grow into a substantial threat to your business and its revenue. Risk monitoring entails 'keeping an eye' on the risk situation via frequent risk evaluations.  

It's crucial to understand that risk management isn't a one-off event; it's a process that persists through the life of a business as it aims to anticipate cybersecurity threats and handle them proactively before they have adverse effects.

What Are Some Key Risk Reduction Strategies?

There are four key risk reduction strategies we recommend:

Risk avoidance

First, consider how dangerous a risk might be. If the worst case scenario means a huge cost in safety or finances, it’s usually best to completely avoid the problem before it starts. Avoiding risks includes maintaining secure backups of vital records, monitoring third-party data keepers, keeping passwords secure, and other steps.

RiskRecon, a Mastercard company, is a non-intrusive monitoring system that prioritizes risks and gives you a blueprint for how to move forward. No risk is completely avoidable, but our scalable internet-surface monitoring platform lets you inform vendors of what gaps to address.

Risk control

With this risk reduction strategy, once you complete your risk analysis, you take measures to reduce the probability of a risk occurring or its impact should it happen. Risk control is a common approach when it comes to risk prevention. This strategy is sometimes known as lowering risk. By choosing this strategy, you must work out the steps you'll take to make risks more manageable.

Our Portfolio Issue Risk Matrix takes a load off your shoulders by showing the most vital issues to address. The Risk Matrix compiles all the gaps it finds in vendor risk management, then suggests steps to control those risks. You can concentrate on fixing vendors’ problems either general or one-on-one to reduce the impact any breaches would have.

Risk transference

This risk reduction strategy involves passing risk consequences to a third party. For many companies, that involves collaborating with a managed service provider (MSP) to cover certain risks. Also, risk transference might be written into contracts with outsourcing partners, suppliers, or contractors, shifting risk away from your company. For example, our findings may show that one vendor has significantly more issues than others. In that case, it is the vendor’s responsibility to resolve those issues after you inform them.

Risk acceptance

This strategy involves accepting the risk as is. Sometimes the likelihood of reward outweighs the risk, and taking the opportunity is beneficial in the long run. It’s also an option if  the possibility of the risk occurring is minimal, and/or the potential impact is minor.

Some risks or disasters, once identified, can be eliminated or reduced. However, many risks are difficult to mitigate or avoid, especially high-impact, low-possibility risks. Thus, risk management and mitigation should be long-term efforts by risk managers and project directors throughout business operations. 

Other risks that are difficult to mitigate or avoid include residual risks. A residual risk is a risk that remains even after you've implemented all the procedures, security controls, and policies you deem adequate to take. Alternatively, this Residual risks can affect your organization even after you implement all appropriate security measures.  

However, if you adopt this strategy, it's crucial to monitor risk thoroughly for any changes to the likelihood of occurrence or impact. RiskRecon’s passive monitoring technology delivers two major resources: identification and management. If risks change, or if they seem likely to occur, you’ll receive reports recommending what to change.

More about Risk Avoidance

Risk avoidance is one of the best risk management techniques to prevent and control risk. Risk avoidance involves eliminating any exposure to risks that pose potential losses, whereas other risk reduction methods entail reducing the possibility and severity of potential losses.  

Risk avoidance vs. reduction strategies must be weighed equally. It'll ultimately come down to the amount of risk involved and how much you want to diversify your portfolio. Here are some pros and cons of other risk reduction strategies, compared to risk avoidance:

Risk Reduction

  • Adopts the "best of both worlds" strategy to mitigate risk while opening yourself up for potentially high returns.
  • If risks occur, it can be costly.
  • Requires a more robust approach to investing, including a thorough understanding of your liabilities. 

Risk Avoidance

  • Safely guarantees that resources and returns won't be jeopardized or lost.
  • It provides a simple way to focus on steady income streams.
  • Shuts the door on opportunities for future gains, including potentially high returns or profitable partnerships.

What Tools Do I Need to Tackle Risk Reduction?

Your business is threatened by hackers, whether you know it or not. Unfortunately, this is just a fact in modern life. Luckily, you can leverage the following tools to minimize cybersecurity risks: 

Continuous Risk Monitoring

With a 24/7 “risk cycle,” in which threat actors are exploiting vulnerabilities at all times, it’s vital to have a program that handles round-the-clock risk monitoring for you. Our software is always active and constantly reports on what needs to be addressed. RiskRecon’s continuous monitoring capabilities provide quick, accurate security suggestions.

National Institute of Standards and Technology (NIST) framework

NIST framework is a process where risk managers and other defenders constantly track, assess and react to the risk environment and carefully respond to cyber threats while keeping data safe with established best security practices. This framework has a set of guidelines that help businesses effectively manage and reduce cybersecurity threats. The framework has five essential functions, each related to various aspects of risk management: identify, detect, protect, respond, and recover.

Network Security Assessment

This is an audit. It's an overview of your network's security measures meant to uncover weaknesses in your systems and networks. This tool assesses every device on your network to identify gaps in the IT infrastructure, neutralizes threats across browsers, email, and files, and scans for compromised data on the Dark Web. There are two types of security evaluations: a penetration test, which simulates an actual attack, and a vulnerability assessment, which shows businesses where their gaps are. 

Automated questionnaires

These are essential elements of cyber risk reduction strategy, which organizations use to assess their third-party risk. However, creating and sending questionnaires is laborious, and validating responses can be challenging. Leveraging automated questionnaire platforms can remedy those challenges by creating vendor-specific questionnaires you can send and track at scale. In addition, this creates transparency between you and third-party vendors because you can monitor their responses to questions in real time—facilitating questionnaire management. 

How Can RiskRecon Help Me?

Security is a thorny issue in a world where businesses partner with various third- and fourth-party vendors. Although risk avoidance, control, tranference, and acceptance make strides in creating a safe internet, no risk is completely avoidable. New threats are emerging all the time, so the state of your security needs to adapt with the changing cyber environment. 

That’s where RiskRecon comes in handy. We can help you adequately evaluate the quality of your third- and fourth-party service providers. Our SaaS solution can help your company get accountability and transparency from service providers by offering real time assessment of their IT security profile. As a result, you can trust us to boost productivity, assess security programs, and ensure transparency and accountability among all stakeholders. In addition, we'll communicate all potential and actual risks and provide actionable measures you can execute to reduce the threats to your organization's digital assets. Start your 30 day free trial here!