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What are the Types of Risk Assessments and When to Use Them?

Posted on September 8th, 2021

Creating a cyber-resilient organization means understanding your security risks and how to mitigate them. However, the cybersecurity risk’s continuously shifting nature makes it challenging for organizations to choose the right risk assessment strategy. By understanding the types of risk assessments and how to use them, you can make better-informed decisions.

Generic risk assessment

Generic risk assessments often fulfill a variety of use cases, but they lack customization. Outside of cybersecurity, an organization might use these for managing contractor workers.

What it is

Generic risk assessments usually follow a template. In cybersecurity, you might use one to ask questions that provide visibility into risk. They typically review a broad set of risks across several factors.

For example, they might ask basic security questions like:

  • Do you have a password policy?
  • Do you use firewalls?
  • Do you install security updates regularly?
  • Do you use encryption?

When to use it

Vendor questionnaires are an excellent example of a generic risk assessment. Usually, these questionnaires cover basic security controls, so you can use a template that addresses primary security risks.

However, you might also want to consider vendor criticality and risk before using generic risk assessments. If a vendor is critical to your business processes or interacts with sensitive data, you might want to consider something tailored to the specific use case.

Qualitative risk assessment

Based on subjective experience, these risk assessments tend to be the most commonly used. Since they lack metrics, you need to keep in mind that people’s backgrounds create bias.

What it is

In cybersecurity, qualitative risk assessment is often based on a person’s expertise and background. Usually, a group of stakeholders will share their thoughts and suggest a risk score.

They might discuss the following:

  • Data category
  • Business criticality
  • Financial risk
  • Data breach news

When to use it

Quantitative risk assessments can be used for internal discussions. They act as an excellent way to get a sense of what different people think about cybersecurity risk, either your own or a potential vendor’s. They are also less time-intensive than other risk assessments. This makes them useful during the early decision-making stages.

Quantitative risk assessment

Quantitative risk assessments focus on using objective data to determine risk scores.

What it is

These risk assessments usually rely on facts and metrics. In general, a quantitative assessment evaluates risk with a formula like:

Risk = Probability of a Data Breach X Financial Impact of a Data Breach

However, while the formula looks simple, the factors that contribute to it are more complex. For example, some considerations include:

  • Current security controls
  • Recent data breaches
  • Attacks within the industry
  • Data types
  • Data criticality
  • Customer churn

When to use it

In cybersecurity, quantitative risk assessments can be used to assess your organization’s data breach risk and your vendors’ security posture.

Nearly every data security and privacy compliance mandate requires a risk assessment. Since qualitative risk assessments focus on research and objective data, they enable more informed decision-making.

Although every risk assessment comes with some inherent bias, these assessments require data to support the opinions. Organizations that need to meet compliance mandates can use the documentation to make decisions and prove governance over security and privacy programs.

Site-specific risk assessment

Site-specific risk assessments are usually limited in scope and focused on a specific use case.

What it is

In cybersecurity, site-specific risk assessments are less prevalent. They usually focus on a specific project, taking location, environment, and people into account. Since site-specific risk assessments are generally linked to a geographic location, like a branch office, they can be less helpful in cybersecurity. With hyper-connected IT ecosystems, a risk that impacts one area likely has a domino effect across the organization.

When to use it

However, site-specific risk assessments can offer value when an organization has a subsidiary or an IT asset with unique security issues.

Some examples of when a site-specific risk assessment is helpful in cybersecurity include:

  • A system or network in a highly regulated geographic area
  • A recently acquired company whose systems and networks are different from the parent company
  • An Operational Technology (OT) environment that has unique security risks

In these cases, the systems and networks pose unique risks to the organization’s security. Doing a site-specific risk assessment makes sense because you need to evaluate the unique impact.

Dynamic risk assessment

While most risk assessments focus on a moment in time, dynamic risk assessments focus on continuous evaluation and response.

What it is

Cybersecurity teams benefit from engaging in dynamic risk assessments. With a dynamic risk assessment, you’re constantly monitoring for emerging risks, evaluating the impact in real-time, and mitigating them as quickly as possible. Dynamic risk assessments should supplement any other risk review processes you have.

When to use it

Nearly every compliance mandate focuses on continuously monitoring controls’ effectiveness to mitigate data breach risk. While you still need to engage in annual, formal risk assessments, dynamic risk assessments help you respond to evolving threats.

For example, a dynamic risk assessment in cybersecurity should consider new:

  • Common vulnerabilities and exposures (CVEs) that need to be patched
  • Zero-day exploits
  • Tactics, techniques, and procedures (TTPs) used by malicious actors
  • Ransomware and malware strains
  • Vendor data breaches

SecurityScorecard streamlines the risk assessment process

SecurityScorecard’s security ratings can enhance your risk assessment processes. Our easy-to-read A-F security ratings monitor IP addresses so that you can gain visibility into branch offices or subsidiaries.

SecurityScorecard’s platform continuously monitors your ecosystem, sends alerts to your security team, prioritizes risk, and suggests remediation actions. Our platform allows you to establish metrics so that you can create quantitative, real-time, dynamic risk assessments to manage your organization’s and supply chain’s security risk.

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