Managing risk and meeting compliance are two fundamental aspects of an organization’s security. Risk management is a cyclical process involving identifying, analyzing, evaluating, treating, and monitoring risk. The goal of this process is to eliminate the most risk possible in the most economical way possible. Meeting various industry compliance regulations is becoming increasingly complex due to an overall rise in security risks. Risk and compliance often come hand in hand as addressing risks is often a necessary part of meeting compliance. The time-consuming nature of managing risk and compliance can make it difficult for IT teams to handle without introducing automation. In this article, we will look at the kinds of tools that can be used to cover the risk and compliance needs of your SMB.

What are risk assessments and risk analyses?

A large part of a successful cybersecurity plan is understanding how to manage risk. To do this, you need to be able to understand what risks exist for your systems based on vulnerabilities of those systems and trends of cyberattacks. Once you know what risks exist, and their likelihood of occurring, you can begin to figure out the costs associated with those risks. After all of that is understood you can begin to manage risks by adding security features that address prevention, detection, response, identification, and recovery. By determining which risks are most pressing you can make changes to your security systems accordingly. 

All of that is easier said than done. Each step of that process can be broken down into manageable steps. The first two steps to a successful risk management plan are performing a risk assessment and risk analysis.

The goal of a risk assessment is to identify vulnerabilities that exist in your organization’s security controls. The goal of the risk analysis is to weigh the risks discovered in the risk assessment to determine which are the most critical threats that deserve the most immediate attention.  

Before we get into vendor solutions to help with this we will give a brief overview of what the process entails. It is possible to perform both a risk assessment and risk analysis without the aid of software. However, these processes require an IT employee or security professional who is very familiar with the security systems in place and who has time to perform both processes on at least a semi-annual basis.

To perform a risk assessment, you can use a risk assessment framework such as ones provided by the National Institute of Standards (NIST) and the Committee of Sponsoring Organizations of the Treadway Commission (COSO). To identify risks you must inventory your assets, determine potential threats, determine in what conditions these threats may occur, and then determine what consequences these risks will have. These all can be recorded in a document known as a risk register.

Example of a risk register

To analyze these risks you must assign values to them. In the past, risks were qualified on a subjective scale based on the likelihood of them occurring and the damage they may cause. Nowadays, it is more common to quantify these risks by assigning objectively calculated dollar amounts to these risks based on what the total costs of each risk are projected to be. This requires a thorough understanding of risks as well as details on business function (such as what reputational damages may be and what executives’ response to an incident may look like).

Why does it help to look at governance, risk, and compliance together?

Due to the rising threat of cyberattacks, industry compliance is becoming increasingly strict. Compliance dictates what kind of confidential information businesses can manage and ensures certain security standards are met. Compliance in many ways overlaps with risk management due to the fact that in order to be compliant, risk has to be managed to a certain degree.

Looking at governance, risk, and compliance, as interrelated functions is known as GRC. Elements of GRC which have an immediate impact on risk management are controlling risk, ensuring transparency and accountability across an organization, as well as defining strategic business objectives in the interest of corporate stakeholders. 

If a business silos each part of GRC (governance, risk, and compliance management), managing GRC can become disjointed. In siloed businesses, programs and processes do not communicate with each other leading to a lack of efficiency and transparency. This makes it difficult to take asset inventories for risk assessments. It also makes it more difficult to ensure a business is fully compliant with all regulations. Overall it leads to inefficiencies that make it more likely resources are not spent wisely and vulnerabilities do not get patched.

The areas of GRC. Sourced by ComplyWorks

Companies are increasingly making security an organization-wide effort. This means more communications between IT teams and other departments and executives. It also means viewing cybersecurity risks as being related to business risk rather than a separate entity. It takes organizational change to make strong GRC programs. But if done correctly it can greatly improve the risk management process.

Vendor tools to help with risk and compliance

There are a variety of security solutions to help businesses with risk and compliance. Some of the most common kinds are discussed below. We are going to begin with the most specialized software. This means software specialized to do just one task of the risk management process. The later tools we list will get into solutions that cover all areas of risk management in one tool.

Risk assessment software

The purpose of this software is to help automate the risk assessment process. The tools scan available data across your organization to identify vulnerabilities. These tools include a risk register to properly record these risks and risk libraries that show common risks which may pose a problem for your business.

Risk quantification software

Risk quantification software helps you decide which risks to prioritize by assigning monetary values. They include databases to predict the actual monetary costs more accurately. Without having access to data it can be very difficult to estimate monetary costs quickly or accurately. A common method to do this is known as Factor Analysis of Information Risk (FAIR). FAIR breaks everything down into financial terms. For example, using this methodology you could look at costs to your reputation as the cost of hiring a communication agency to improve PR. It encourages you to consider all costs that will go into incident response. This method is more accurate than other ways to estimate risks such as heat maps, but it takes a longer time to perform and to learn how to use.

Risk management software

Risk management software combines assessment and analysis capabilities, and is more often what you will see than just risk assessment software or just risk quantification software. These functions are often able to be viewed and administered in a user-friendly dashboard.

GRC software

GRC software makes the process of managing governance, risk, and compliance manageable through one tool. Often, the software allows whole teams to interact with it in order to increase sharing between teams and departments. Task management functions help streamline the behavior of these teams. On the risk side, these tools allow you to identify gaps in security by performing risk assessments. The security included in the tools themselves help you reach compliance and the tools often have teams to work with you to ensure you are meeting compliance in all areas of your security.

Integrated Risk Management (IRM) software

The term IRM was coined by Gartner in 2018. There is some controversy about whether IRM really is different from GRC software. Some analysts claim the two are synonymous, particularly since the exact functionalities of GRC software will vary between vendors, and some GRC software seems to have the same functionalities as IRM software. The biggest difference between the two is that IRM’s main focus is on risk, although it does also help with governance and compliance. IRM looks at all risks in an organization together. This means viewing cybersecurity risks as being interrelated with regulatory risks, financial risks, operational risks, and compliance risks. It is a business-wide approach to looking at risk.

Do these processes need to be automated?

In some ways the smaller size of SMBs compared to enterprises makes it easier to perform risk assessments and analyses, keep track of compliance regulations and handle governance. Smaller businesses have fewer assets to inventory, handle smaller quantities of customer data, and have fewer departments that may become siloed than large enterprises. On the other hand, the IT employees at these companies have many responsibilities and it can be difficult for them to find the time to handle these responsibilities. 

Automating tasks where possible, particularly when the tasks can be done just as if not more efficiently with tools, is a good option for SMBs. The user-friendly dashboards of risk management solutions make it easy for IT employees to use without the need for specialized training. Working out which of the solutions discussed above is best for your organization will depend on your budget, how many IT employees you have, and to a degree how involved executive leadership is. The governance aspect of GRC relies on some involvement by executives to try to break down the silos of the business and increase sharing between departments. IT cannot do this alone. Our article on how SMBs can capitalize on their risk management strategy has more information on why executives are important to the process.

Are integrated risk management solutions useful for SMBs?

As we’ve said, taking an integrated approach to risk management is much easier to implement if executives are onboard. This approach is becoming increasingly popular among enterprises. Many enterprises use a risk management approach called Enterprise Risk Management (ERM). Compared to traditional risk management, ERM takes a more holistic approach. Traditional risk management looks at more localized risk and does not look at the broader picture of how that risk affects the business. ERM views cybersecurity risk as being interrelated with all kinds of business risks.

While this approach to risk management is used by enterprises it is also possible to leverage it with SMBs. It may be particularly useful for larger SMBs. Startups with few employees and few departments likely will not have the need for such an integrated approach. But just like enterprises, SMBs can have many departments that can quickly become siloed. 

Another benefit of these solutions is that they take functionalities of other risk management solutions and package them into one tool. This reduces vendor sprawl. Vendor sprawl refers to the number of tools a company uses. If a company uses many different vendors and many different tools for their cybersecurity tech stack difficulties can arise. It becomes harder to monitor these tools, increases the workload of IT staff, adds more access points to worry about, and increases the risk of there being integration issues between tools. 

Make the most of your tech stacks

Acquiring software to handle your risk management and compliance security needs is an important step into building a fully functional tech stack. Without properly handling risk management your systems will have unknown vulnerabilities. You will also be more likely to spend unnecessarily on areas of security that are not the most critical to invest in if you don’t properly assess and analyze risks. 

The risk management cycle, sourced from Invensis Learning

Risk management is a cycle. Once you assess and analyze risks you then need to respond by fixing vulnerabilities. To do this you may find it beneficial to continue building your tech stack to include tools that will address any weaknesses in your security posture. Once these areas are addressed it is important to start the risk management cycle again and ensure that vulnerabilities that had existed no longer are present.

Keep up to date with PeerWise as we put out articles on all areas of a tech stack a company should have to be secure by becoming a member and signing up for our newsletter. We will go more in-depth into the tools discussed in this article so you know exactly what SMBs are looking for in each tool.