The pace at which technology has changed and innovated has brought many new advantages for businesses. From e-commerce platforms making products/services more accessible to artificial intelligence (AI) enabling people to work faster and more efficiently. However, although all this innovation is aimed at making businesses better, it has also brought on new cybersecurity risks.
South Africa ranks first in Africa as the most targeted country for cybercrime. The country accounts for over 40% of the continent’s ransomware attacks and nearly 35% of infostealer incidents. Over 70% of South Africans have been affected by data breaches, with the country losing approximately R2,2 billion annually.
For small to medium-sized enterprises (SMEs) the cybersecurity risk is bigger. Typically, SMEs have the most basic cybersecurity plan, which does not always account for risks they have yet to face. But with threat actors becoming more sophisticated through the use of AI and deepfakes, SMEs must view cybersecurity as a risk management strategy.
In this article, we look at what cyber risk management is, how it works for businesses and the strategies SMEs need to adopt.
What is Cyber Risk Management?
Cyber risk management, also called cybersecurity risk management, is the continuous process of identifying, analysing, and mitigating potential threats to an organisation’s digital infrastructure, sensitive data, and operational stability. It operates on the principle that absolute security is impossible, focusing instead on reducing risk to a level the business can safely accept.
The Cybersecurity Risk Management Process
It’s difficult and complex for companies to evaluate cyber risk with total certainty. Businesses rarely have full visibility into the tactics of cybercriminals, their own network vulnerabilities or more unpredictable risks like severe weather and employee negligence.
There are many cyber risk methods, and while they differ slightly, they all follow this set of core steps.
1. Risk Framing
Risk framing is the act of defining the context in which risk decisions are made. By framing risk at the outset, companies can align their risk management strategies with their overall business strategies.
To frame risk, companies define the following things:
- Scope of the process: What systems and assets will be examined? What kinds of threats will be looked at? What timeline is the process working on (e.g., risks in the next six months, risks in the next year, etc.)?
- Asset inventory and prioritisation: What data, devices, software and other assets are on the network? Which of these assets are most critical to the organisation?
- Organisational resources and priorities: What IT systems and business processes are most important? What resources, financial and otherwise, will the company commit to cyber risk management?
- Legal and regulatory requirements: What laws, standards or other mandates must the company comply with?
2. Risk Assessment
Businesses use cybersecurity risk assessments to identify threats and vulnerabilities, estimate their potential impact and prioritise the most critical risks. How a company conducts a risk assessment will depend on the priorities, scope and risk tolerance defined in the framing step. Most assessments evaluate the following:
Threats: Threats are people and events that can disrupt an IT system, steal data or otherwise compromise information security. Threats include intentional cyberattacks (like ransomware or phishing) and employee mistakes (like storing confidential information in unsecured databases). Natural disasters, like earthquakes and hurricanes, can also threaten information systems.
Vulnerabilities: These are the flaws or weaknesses within a system, process or asset that threats can exploit to do damage. Vulnerabilities can be technical, like a misconfigured firewall that lets malware into a network or an operating system bug that hackers can use to take over a device remotely. Vulnerabilities can also arise from weak policies and processes, like a lax access control policy that lets people access more assets than they need.
Impacts: Impacts are what a threat can do to a company. A cyberthreat could disrupt critical services, leading to downtime and lost revenue. Hackers could steal or destroy sensitive data. Scammers could use business email compromise attacks to trick employees into sending them money.
The impacts of a threat can also spread beyond the organisation. Customers who have their personally identifiable information stolen during a data breach are also victims of the attack.
Risk: Risk measures how likely a potential threat is to affect an organisation and how much damage it could do. Threats that are likely to happen and likely to cause significant damage are the riskiest, while unlikely threats that would cause minor damage are the least risky.
During risk analysis, companies consider multiple factors to assess how likely a threat is. Existing security controls, the nature of IT vulnerabilities and the kinds of data a company holds can all influence threat likelihood.
3. Responding to Risks
Companies use the risk assessment results to determine how it will respond to potential risks. Risks deemed highly unlikely, or low-impact risks, may simply be accepted, as investing in security measures may be more expensive than the risk itself.
Possible risk responses include the following:
- Risk mitigation: Mitigation is the use of security controls that make it harder to exploit vulnerabilities or minimise the impact of exploitation. This could be an intrusion-prevention system placed around a valuable asset or implementing incident response plans for quick detection and eradication of threats.
- Risk remediation: Remediation means fully addressing a vulnerability so it can’t be exploited. This could mean patching a software bug or retiring a vulnerable asset.
- Risk transfer: If mitigation and remediation aren’t practical, a company may transfer responsibility for the risk to another party. Having a cyber insurance policy is the most common way companies transfer risk.
4. Monitoring
The last part of the process is when an organisation monitors its new security controls to ensure they work as intended and satisfy relevant regulatory requirements. Additionally, the company will monitor the broader threat landscape and its IT ecosystem. Changes in either one can open up new vulnerabilities or make previously effective controls obsolete.
With consistent monitoring, companies can efficiently tweak their cybersecurity solutions and risk management strategies in real-time.
Why Cybersecurity Risk Management Matters
Every business of every size is a potential target for cyberattacks. This makes cybersecurity risk management essential not only for protection but also for operational and strategic resilience. Here are some reasons why:
The Attack Landscape is Growing
With the growth of remote work, bring-your-own-device policies, and digital transformation initiatives, the number of systems and endpoints connected to your environment has never been higher. Each new tool or connection increases your organisation’s attack surface—and, with it, your risk exposure.
Third-party Risk is Now First-party Risk
New-age companies rely heavily on third parties and vendors for various things. If one of your vendors suffers a breach, it can expose your systems and data even if your internal controls are solid.
Compliance Expectations are Growing
Regulatory bodies such as the Information Regulator are increasingly holding organisations accountable for cybersecurity lapses, even when those breaches are from an external partner. SMEs need to ensure their cybersecurity efforts are robust and do not put client information in danger.
Customers Expect Protection
Customers and partners expect transparency and security measures. Demonstrating that you actively manage cybersecurity risks is key to earning trust and retaining business.
For SMEs, effective cyber risk management means developing a strategy that can identify, mitigate and resolve any issues.
