IT risk assessment is one of the most crucial processes in your organization. Assessing risk and putting contingency plans in place helps run the organization smoothly. 

For an enterprise running any kind of business in 2020, it’s important to make sure that your IT infrastructure is sound. It’s not under imminent threats, and if there are any risks, it has been assessed and managed. 

In this article, we will discuss:

• What is an IT risk assessment?
• Components of IT risk assessment
• Why is IT risk assessment important for your organization?
• When is the best time to conduct an IT risk assessment?
• 9 steps to a successful IT risk assessment

What is an IT Risk Assessment?

IT risk assessment is the process of pointing security risks in your IT system and assessing the threats they pose. Organizations conduct an IT risk assessment to mitigate risks and prevent security incidents.

Components of IT Risk Assessment 

IT risk assessment identifies security holes in your system and performs threat analysis. In an IT risk assessment, you need to create three lists:

IT Assets 

The IT assets list includes computer hardware and software resources in your organization. IT assets are an essential component of an organization’s IT system and network infrastructure. 

For an enterprise to succeed, it’s crucial to keep a complete record of its IT assets. You should also know how much damage an IT asset’s exposure or loss may cause.

Business Processes 

The second most critical component of an IT assessment is the business processes. It’s essential to know how a business procedure depends on an IT asset.

The business process is an activity or group of activities executed to reach a specific goal. There are three types of business procedures:

Operational process: 

Operational processes include the development, marketing, and customer support of a product/ service. These processes contribute to generating incomes for the business. 

The operational process, also known as primary processes, must be directly related to the end product. 

Example: 

In a fruit selling business, the primary processes are buying the fruit, packing, and delivering them. If the seller also stores the fruit, then stocking is also a primary procedure. It sounds a bit different, but storing also contributes to generating revenue. 

Supporting process

Supporting processes do not generate income directly. They are essential for the primary process to complete and work properly. 

Example

An example of a supporting procedure is the payroll department of your company. It doesn’t make money but helps keep certain things in order.

Management process 

The management processes are where the coordination between primary and secondary processes occur. The management processes involve planning, monitoring, and overseeing the entire process. 

Management processes are similar to the secondary procedures. The management processes do not generate revenue but are crucial to keeping an organization sound. 

Threats 

Last but not least, you need to assess all the threats that endanger the organization’s integrity. It includes how threat events can impact the organization’s IT assets and how likely security they are. 

Why is IT Risk Assessment Important for Your Organization?

IT risk assessment ensures that your organization’s IT infrastructure is safe and secure. It’s conducted to identify potential risks and put controls in place to deal with them. 

The practical use of IT risk assessment is not the only focal point. It’s also required by many compliance regulation standards.

Most standards do not have a specific set of guidelines. However, they require businesses to keep their IT system secure and ready for audit. The auditors must be presented with evidence that security measures are in place to reduce data security risks. 

When is the Best Time to Conduct an IT Risk Assessment 

IT risk assessment is not a one-time procedure. For a sound IT infrastructure, it should be conducted periodically throughout the enterprise’s lifecycle. It is recommended to conduct an IT assessment at least once a year. 

Conducting a risk assessment before and after an upgrade is recommended. It ensures that new vulnerabilities are not added to the system. If there are any vulnerabilities, it’s always better to deal with it heads on.

9 Step to a Successful IT Risk Assessment

Business Impact Analysis (BIA) predicts the results of disrupting business processes and how to recover from the disruption. IT risk assessment is the step after BIA. 

The nine steps to a successful risk assessment include:

Step 1: Name Your IT Assets

In an IT infrastructure, it’s always important to know your IT assets. IT includes client information, servers, sensitive documents, trade secrets, and more. 

The main thing about IT assets is that it’s different for everyone. A document may not look important to you when it is (in fact) valuable. 

To identify IT assets, management and users must work together. For each IT asset, you need to collect the following information:

• Hardware
• Software
• Data 
• Users
• Support personnel
• Purpose
• Importance 
• Functional specifications
• Information flow
• Network topology
• IT security architecture
• Information security policies
• Technical security controls
• Physical security environment
• Environmental security

Most organizations have a limited budget for risk assessment, so it’s vital to prioritize assets. You also need to define a standard to determine the importance of each asset. 

You can prioritize assets according to their legal standing, financial value, and standing in the organization. After settling on a standard, formally incorporate it into the information risk management policy. Now, use the agreed-upon criteria to identify and prioritize IT assets.

Step 2: Identify Threats 

A threat to your IT asset is anything that can cause harm to it. The peril may be natural, malicious behavior, equipment failure, hackers, etc. 

Some common threats to your organization include:

• Natural disaster
• Hardware issues
• Server issues
• Malicious behavior

Natural Disaster

Every natural disaster like hurricanes, floods, fire, and earthquakes is a threat to your organization. It only destroys hardware resources but also data (if it’s stored on the premises). 

The threats are different in different places, and you should prepare for those specific to your location. For example, your area might have a higher risk of tornados than earthquakes. 

Hardware Issues

Hardware issues can affect sensitive and significant business data. If the hardware is old, there’s a higher chance of further problems. Whereas high-quality and relatively new hardware is less likely to fail. 

Server Issues 

Whether you have a server on location or using the cloud, server issues are a threat to the organization. Servers store all the data, which is required on several occasions throughout the day. 

Malicious Behaviour

You can categorize malicious behavior into three categories: 

• Interference: it is when someone causes damage by deleting or manipulating data. Inference can happen by physically stealing data, DDoS attacks, etc. 
• Impersonation: illegally obtaining and misusing someone’s credentials in an organization. Hackers can get those credentials through brute-force attacks, phishing, or other hacking methods.
• Interception: data theft or piracy.

Step 3: Define Vulnerabilities 

The third step in risk assessment is to identify the vulnerabilities in your organization. It’s essential to know the vulnerabilities as they enable a threat to harm your organization.

Identify and list all vulnerabilities to your IT network. From ransomware, phishing to DDoS attacks. Your system probably won’t fall victim to all those vulnerabilities, but it’s essential to make a note of it. It helps prepare the non-IT bodies to realize the importance of regular maintenance, assessments, and audits. 

A vulnerability assessment must be conducted both manually and using automatic tools. Both automatic and manual tools help identify the weaker points. An audit checklist and security risk assessment checklists are also useful in reviewing risks. On the other hand, web-based assessment tools offer advanced means to computer risks. 

A few ways to identify vulnerabilities in your IT system are:

• Audit reports
• Analysis
• IT security test and evaluation (ST&E) procedures
• Vendor data 
• Penetration testing
• Automated vulnerability scanning tools

Step 4: Catalog Risks

Once we have all the vulnerabilities, threats, and assets, it’s time to identify and catalog risks. Some risks are more serious than others and need immediate attention. 

We can use the following formula to assess the levels of risk:

Risk = Asset x Threat x Vulnerability

The formula for risk assessment is not mathematical. It’s a model to understand the relationship between the various components to identify hazards.

To assess risk, the first thing you must remember is zero time anything is zero. If the vulnerability and threat levels are high, but it’s not an asset, then we can skip it.

After categorizing each risk into categories, the next step is to identify to determine the probability of each risk event.

Step 5: Name to Risk Owners

Risk owners are individuals who have the authority to mitigate or manage risks. 

Assigning a risk owner or owners is vital to mitigate risk. If you don’t assign one risk owner, then by default, the whole enterprise is responsible for the risk. In which case, nothing will likely be done or managed properly. 

Once we have a risk owner in place, the next step is to analyze risks.

Step 6: Collect Data and Prioritize Risks 

In the digital age, data is in the heart of everything!

Before making any further move, we need to gather data about every risk and prioritize them. Data itself is an asset, and subject to data privacy legislation. Everything from the HR files, to the client’s private information, is data.

In the risk prioritization, we also need to address the following:

• Probability of a risk event.
• The cost factor in the case of a risk event.
• The aptitude of the existing information security measure to eliminate risks.

An enterprise can make use of the risk matrix to define the level of risks. For the risk matrix, we need two factors, probably of the risk occurring against the potential impact. The risk matrices are different for various enterprises. The hazard can be categorized as:

• Catastrophic: the impact is very high, for instance, with an impact value of 100. 
• Medium: the impact level is not very high but must be addressed. We can assign it an impact value of 50.
• Minor or Negligible: risk with a very low influence. We can assign it an impact value of 10. 

With adequate data, it’s important to prioritize risks. Enterprises have a budget for risk assessment and prioritizing risks can address the critical one. 

Step 7: Risk Analysis for IT Risk Assessment

Risk analysis is the process of examining the impact of risk events on the outcome of certain objectives. In risk analysis, the organization analyses both qualitative and quantitative impacts of risks. Each threat, vulnerability, and likelihood is assessed to provide a complete analysis. 

The next step is to make a risk mitigation plan to figure out how to deal with the risk events. 

Step 8: Risk Mitigation Plan

The risk mitigation plan provides a blueprint to minimize or eliminate risks. IT includes everything that can affect the organization negatively.

There are four ways an organization can manage risks: 

• Modify the risk: apply risk measures and controls to reduce the probability of its occurrence and damage. 
• Retain the risk: accept that the risk falls under an already acceptable category. Risk retention can happen because the enterprise has to retain or because they choose to. 
• Transfer the risk: if the organization cannot manage risk, they can outsource it to a specialized organization. It can be an insurance firm or another third-party specializing in that particular risk department. 
• Avoid the risk: check if it is possible to avoid the risk by putting specific measures in place. 

Step 9: Document the Results 

The documentation is the last step in IT risk assessment. It’s important for auditing and certification purposes.

The most important documents created in this stage are:

• Risk treatment plan (RTP)
• A document outlining the risk mitigation plan
• Statement of applicability (SOA)

The sixth clause of SoA addresses the following:

• Identifies which measures are put in place to tackle the identified risk events.
• Explain why the measures are selected.
• State if the organization has implemented the controls.
• Explain why some measures are omitted

Conclusion

IT risk assessment is essential to keep your organization’s IT policies and procedures up-to-date. It ensures that you have all the facts and can make an informed decision. 

It’s important to conduct risk assessment periodically and update your IT policies and procedures. To start, you can get IT policies and procedures templates from expert British and Dutch auditors.