In the 21st century, humanity faces the most rapid industrial digital transformation in history. Dynamic industrial companies are constantly emerging, which means there is vast room for growth and value in the industrial sector, while new industrial companies will face ubiquitous cyber-attacks. The critical nature of industrial companies does seem to invite cyber risks as they embrace modern technologies. Industrial companies produce capital goods in aerospace, defence, metal manufacturing, construction, etc. These industries have a significant impact on people’s lives.
Few main threats to industrial companies are operational disruption, financial loss and such. When an organization experiences a cyberattack, it may face business interruption, system outage, shut down for repairs, etc. These impacts have historically caused considerable losses to the business. The most effective way to protect industrial companies from network attacks is to adopt cyber risk management.
Cyber risk management is the process of identifying risks, assessing risks, and specifying plans to minimize or control these risks. Cyber risk management is vital to an industrial organization and could be considered an essential part of its business strategy. It can help a company deal with cyber risks accurately, efficiently, in a timely manner, and achieve business goals. Below are the details of how to implement cyber risk management in four steps.
Identify cyber risks
Identifying cyber risks is the identification and description of potential risks. Identified risks should be documented as part of a risk assessment report. The following steps form part of identifying risks within an organization.
- Identify threats
A threat is any situation or event that could cause damage. For example, someone got the password of an employee who had access to company resources, someone made unauthorized changes to the company’s internal website, or the company’s server went down for natural reasons.
- Identify vulnerabilities
A vulnerability is a weakness. There are some ways that industrial companies can identify vulnerabilities. For example, companies can regularly accept audits and generate relevant investigation reports. They can also set up incident response teams to investigate security incidents within the company and discover vulnerabilities. After finding out the vulnerabilities, they can establish a vulnerability database to analyze and determine vulnerabilities.
- Estimate the likelihood that the threat will exploit the vulnerability
By identifying threats and vulnerabilities, industrial companies can estimate the likelihood of occurrence of the risk. A risk occurs the identified threat exploits the vulnerability in the organization.
Assess the risks and analyze its impact
The next step involves assessing each identified risk, analyzing various risk factors and the severity or impact of each risk, when it occurs. This impact analysis may be carried out using different methods, which is often determined by the needs of the organization. The end goal is to understand the severity scale either qualitatively or quantitatively. The classification of risk severity helps to formulate a risk treatment plan, hence needs to be incorporated in analysis of severity.
Risk severity may vary from a scale of 1 to 10 or low to high, respectively. A risk is classified at a higher range when serious damage to the business is estimated. A lower level of severity may be applied to a risk when damages to the business is estimated to be relatively minimal.
After assessing the risks and analyzing their impact, the businesses can produce a resulting risk assessment report that allows the company to decide which risks can be controlled and which risks can be accepted.
Decide the risk treatment plan
Once organizations have identified the severity or impact of the business impacting risks, they would develop a risk treatment plan. There are four ways to manage cyber risks, they are as follows:
- Avoid risk
When the impact of risk far exceeds the asset’s benefit, companies may choose to avoid risks. For example, a company may have a data center located in a city with high natural hazards and may prevent the risk by moving the data center. Although the cost of migrating a data center is high, there is value in migrating the data center, if the data that could be lost is significantly higher in value.
- Transfer risk
Risks can be controlled by transferring responsibility to a third party. The most common treatment is to buy insurance to reduce possible losses. Insurance will pay part of the cost when a failure occurs. For example, if a company has fire insurance, it can get a portion of the money paid out in an accidental fire.
- Mitigate risk
This approach is mainly to reduce risks by reducing vulnerabilities. Industrial organizations can mitigate vulnerabilities by laying out countermeasures, such as beefing up firewall security, storing offline data backup in a remote location, training core technical staff, and so on.
- Accept risk
When the company’s control costs exceed the potential losses, the company can accept the risk.
Monitor the risks
Industrial organizations need to continuously monitor their risk. Because cyber risk management is an on-going process that changes and adapts over time, repeated and continuous monitoring processes help ensure maximum coverage of known and unknown risks.
Improvement in operational efficiency, time to market and reduction in production costs, incentivises the rapid development of digitalization and modernization in industrial organizations. With advances comes threats, like cyberattacks, and businesses need the necessary toolkit to manage the cyber risks. Industrial organizations must have access to the required resources to make proper decisions in the face of sudden network threats to reduce the company’s loss of assets and reputation. It is strongly recommended by public bodies to adopt risk management principles to support business continuity and prevent unexpected losses. It is worth noting that such practices are soon becoming regulations which businesses must satisfy. While cyber threats are constantly changing, sound cyber risk management can help businesses successfully manage and control cybersecurity risks