Risk Assessment - The Why and How

5 mins read

Risk assessment enables organizations to identify, evaluate, and mitigate risks ensuring effective protection and resilience against potential threats.

Risk assessment holds a vital position within the framework of ISO 27001. As organizations strive to protect their valuable information assets from evolving threats, risk assessment plays a crucial role in identifying and evaluating potential risks. By conducting thorough risk assessments, organizations can prioritize their risk treatment efforts, make informed decisions, ensure compliance with regulations, and continually improve their information security management system. In this article, we explore the significance of risk assessment as an essential part of ISO 27001 and its contribution to establishing robust information security practices.

What is ISO 27001?

It is an internationally recognized standard that offers organizations a comprehensive framework for effectively managing information security risks. It is a widely adopted international standard applicable to organizations across various sectors and of diverse sizes.

Why is ISO 27001 critical?

ISO 27001 is essential for several reasons:

  • It helps organizations in the identification and mitigation of risks associated with their information assets.
  • It offers organizations a structured and consistent framework for systematic management of their information security risks.
  • It helps organizations demonstrate their commitment to information security to their customers, partners, and regulators.
  • By leveraging it, organizations can enhance their overall security stance and minimize the probability of experiencing a security breach.
  • And most importantly, it helps organizations prioritize resource allocation based on the severity and likelihood of risks. By identifying and evaluating risks, businesses can focus their efforts and resources on addressing high-priority risks, optimizing cost-effectiveness and efficiency.

How does risk assessment fit into ISO 27001?

Risk assessment is a key component of ISO 27001. It identifies, analyses, and evaluates the risks to an organization's information assets. The risk assessment results are used to determine the most significant risks and develop controls to mitigate those risks.

How to perform risk assessment?

The following are the steps involved in performing a risk assessment for ISO 27001:

1. Identify the asset

The first step is to identify the organization's information assets. This includes all of the information valuable to the organization, such as financial data, customer data, intellectual property, and operational data.

As an example, in this case, let's take organization's information security policies as our asset.

2. Define owner

In order to effectively perform risk assessment, plan, manage or address risk, a risk owner should be associated with each identified risk based on its asset.

3. Identify the threats

Once the organization's assets have been identified, subsequently, identifying the potential risks is of utmost importance to those assets. This includes any event that could harm the organization's information assets, such as natural disasters, human error, or malicious attacks.

The threats to the organization's information security policies include:

  • Misaligned and deviated IT practices
  • Un-implementation of IT policies and procedures

4. Identify the vulnerabilities

A vulnerability is an organization's information security weakness that a threat could exploit. This includes weak passwords, inadequate security controls, or outdated software.

The vulnerabilities that could allow a threat to exploit the organization's information security policies include:

  • Lack of awareness of the policies
  • Lack of training on the policies
  • Lack of enforcement of the policies

5. Identify risk category

In this case the risk category could be applicable to Operational Risk and Strategic Risk. Meaning with the identified threats and vulnerabilities in step 2 and 3, the day to day operation as well as the strategic vision of the organization could be impacted.

6. Assess the likelihood of each risk

Once the organization's assets, threats, and vulnerabilities have been identified, the next step is to assess the probability of each risk occurring. This can be done by considering factors such as the frequency of the threat severity. Additionally, it is crucial to assess the organization's capability to identify and respond to such threats.

The likelihood of a risk occurring can be assessed on a scale of 1 to 4, with one being the least likely and four being the most likely. In this case, the likelihood of a risk occurring is relatively low (1), as the organization has information security policies in place.

7. Assess the impact of each risk

Once the likelihood of each risk has been assessed, the next step is to determine the impact of each risk. This can be done by considering factors such as financial loss, reputation loss, or productivity loss that could result from the risk.

The business impact of a risk can be assessed on a scale of 1 to 4, with 1 being the least significant impact and four being the most significant impact. In this case, the impact of a risk occurring could be moderate (2), as it could lead to security breaches and data loss.

8. Calculate the risk level

The risk level can be calculated by multiplying the likelihood of the risk by the impact of the risk. In this case, the risk level is 2, which is moderate.

9. Identify risk treatment

The risk treatment, in this case, is to implement an effective IT policy implementation mechanism. This could include regular training on the policies, clear communication of the policies, and enforcement of the policies.

10. Risk evaluation

It determines the overall objective and the action to be taken by the organization to address the risk, thus, the investment decision. The risk could be addressed completely by making an investment in designing and implementing the policy properly. In this case, the risk treatment plan is to implement an annual IT policy update.

Risk assessment, while often integrated into ISO 27001, can also be conducted independently, highlighting its standalone value in evaluating and mitigating risks for organizations beyond the scope of the ISO standard.

The image used in this article was generated with the assistance of AI.