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No business today is completely safe from cyber threats, and more companies are waking up to this reality now than ever before. Financial services are no exception – in fact, this industry is one of the main targets sought by cybercriminals. With cyberattacks surging due to widespread remote work and increased online interactions during the pandemic, we can see how this trend continues to grow further. It’s no wonder cybersecurity investment in 2020 grew to reach almost €50 Billion and kept on rising in 2021.

While 58% of IT leaders and practitioners consider improving IT security their topmost priority, nearly 53% of them find cybersecurity and data protection to be among their biggest challenges as well. That’s mainly because cybersecurity is not a one-and-done exercise. Your business might be safe now but could be unsafe the very next minute. Securing your business’ mission-critical data and the data of your invaluable customers requires undeterred effort sustained over time. While there are several pieces to this puzzle, the most important one, considering today’s threat landscape, is ongoing risk management.

Recommended Read: Building an Asset and Risk Register to Manage Technology Risk

Through the course of this blog, you will understand the definition of a cybersecurity risk assessment and why, as a financial services organisation, you must undertake and monitor them regularly. By doing it, you’ll be able to keep your business’ cybersecurity posture abreast with ever-evolving cyber threats. After reading this article, we hope you realise how installing cybersecurity solutions alone isn’t enough to counter cyber attacks unless you make ongoing risk management an operational standard for your business.

Understanding Cybersecurity Risk Assessment

In rudimentary terms, a cybersecurity risk assessment refers to the act of understanding, managing, controlling and mitigating cybersecurity risks across your business’ infrastructure.

The NIST Cyber Security Framework states that the purpose of cybersecurity risk assessments is to “identify, estimate and prioritise risk to organisational operations, assets, individuals, other organisations and the Nation, resulting from the operation and use of information systems.”

The primary purpose of a cybersecurity risk assessment is to help key decision-makers make informed decisions to tackle prevalent and imminent risks.

What are the steps involved when conducting a risk assessment for Financial Services companies?

The risk management process will generally follow the same structure regardless of industry, but the time needed for each stage and the depth of investigation necessary may vary.

Related Read: First Step to Compliance – a thorough and accurate risk assessment

In short, you’ll want to identify your valuable information assets, assess your security posture and gauge threats to your assets. This is the step-by-step process:

Step 1 – Determine the Value of each Information Asset

After listing all information and technology assets, you can then begin to determine the value of each of them. Define which are essential for your business and which are less meaningful, as this will be necessary for your next step. Keep in mind that any piece of financial data or policy document may be considered vital for financial services organisations, as losing it could trigger compliance violations and cause economic damage. To help in this first step, download our Asset Register at the link below:

Download our Asset Register Sample

Step 2 – Prioritise Assets

Now that you know which assets are vital for your business, it’s time to define priorities. By learning your most important assets, you can begin safeguarding them first, allocating resources accordingly. As we explain in this article, prioritising is key in IT risk management.

Step 3 – Identify Threats

After identifying your most important assets, it’s time to think about threats. List everything that could harm your business, from natural disasters to systems failures and human activities. If you already have a technology provider offering support, they should be aware of multiple threats you may not have considered, so use their expertise! When listing and evaluating threats, consider the insights from this article: Understanding and calculating organisational risk

Step 4 – Assess Vulnerabilities

A vulnerability is any weakness that a threat can exploit to breach your business security and wreak havoc. These are the manifestation of the risks we are trying to manage, so take your time understanding their scope and likelihood of happening.

Step 5 – Analyse Existing Controls

Analyse the tools, policies and procedures already in place to minimise or eliminate the probability of a threat. Have an in-depth look at your cybersecurity solutions to determine what is being covered and what is not. You may find you have overlapping tools – which could potentially damage their functionality.

Step 6 – Document the Entire Process

It is both a best practice and a mandate under several regulations to ensure that the entire risk assessment is thoroughly documented. It’ll also be helpful in audits and when switching providers.

Step 7 – Repeat Regularly

Ideally, a cybersecurity risk assessment must answer the following questions:

• What are your business’ critical IT assets?
• What type of breach would have a substantial impact on your business?
• What are the relevant threats to your business and their sources?
• What are the internal and external security vulnerabilities?
• What would be the impact if any of the vulnerabilities were exploited?
• What is the probability of a vulnerability being exploited?
• What cyberattacks or security threats could impact your business’ ability to function?

The answers to these questions will help you keep track of security risks and mitigate them before disaster strikes. Now, let’s dig a bit deeper into how this process benefits your business.

Why Should Financial Services Organisations Conduct Risk Assessments Regularly

For Financial Services organisations, ongoing risk management should be an operational standard. Conducting a risk assessment once will provide you with a direction to move forward, but you’ll only really know how well you are handling vulnerabilities if you continue to monitor potential threats and check on your assets.

If there’s any change in your asset register or the threat landscape – which is ever-changing – your outdated assessment won’t be providing accurate information, which in turn may lead to incorrect business decisions. Plus, if you don’t know what threats may be lurking, you won’t know how to best react and respond to them, which increase their potential to cause harm.

Here are some of the reasons why you just can’t keep this crucial business decision on the backburner anymore:

Reason 1: Changes in Business Scope and Activities

Companies are changing faster than ever before. Your business may develop new services, start new projects, or even pivot entirely in a short period. With every new change, there might be new assets worth protecting and new threats worth noticing. Again, the Covid pandemic is the perfect example, as most organisations suffered a tremendous shift in their operations overnight and failed to recognise the new threats that came along.

Reason 2: Evolving Cybercrime

Just as your activities may be changing, cybercriminals will constantly develop new methods and strategies to steal your money and data. New types of malware and scams come up every year, and we must keep up.

An ongoing risk management strategy will help you keep threats, both prevalent and imminent, at a safe distance from your business – especially ones you usually do not monitor regularly.

Reason 3: Improving Cybersecurity Posture

Since Financial Services are some of the main targets sought by criminals, companies in this space must be at the top of their game. Ongoing risk management will certainly help at that! By discovering threats and vulnerabilities and actively trying to minimise them, your business will be on the right path to improve overall security. You’ll be identifying your gaps, working to bridge them and remaining vigilant in the process,

Reason 4: Enhanced Operational Efficiency and Improved Organisational Knowledge

Knowing your security vulnerabilities and gaps across the business will help you keep a keen eye on important aspects that your business must improve on. Having more organisational knowledge enables you to do a better job when allocating budget and focus on whatever is most important first – both in terms of security and efficiency.

Reason 5: Reduction of Long-Term Costs

Identifying potential vulnerabilities and mitigating them in time can help you prevent or reduce security incidents, which in turn would save your business a significant amount of money and potential reputational damage.

Reason 6: Avoid Regulatory Compliance Issues

Financial Services companies have to comply with multiple regulations, many of which have strict policies regarding data protection and processing. By managing your risks regularly, you’ll put up a formidable defence against cyberthreats and automatically avoid hassles concerning complying with regulatory standards such as HIPAA, PCI DSS, GDPR, etc. And you’ll have plenty of evidence to provide when an auditor comes, which is vital for a successful audit, as we explain in the blog: Before the Audit – Gathering Evidence to Demonstrate Compliance.

Getting Started with your Risk Management Approach

Now that you understand the importance of regular risk assessments and how they should be done, we can move on to the practical side. You can begin downloading our sample Risk Register at the link below:

Download our Risk Register Template

Our first recommendation to tackle risk management is to use a framework like NIST. It’ll provide you with a simple and effective understanding of where you are and what needs improvement. We have a detailed article about it here: A Guide to NIST for Financial Services Organisations.

The very next step after conducting your risk assessment is to develop an Action Plan to address your technology risk. This plan will define your priorities and serve as a guide for your organisation.

These resources are simple enough for a non-technical individual to follow, but you’ll most likely have a better result if working with a specialist. We have in-depth expertise in GRC (governance, risk and compliance), cybersecurity and the challenges faced by Financial Services companies today. Feel free to get in touch, and we’ll be happy to lift this weight from your shoulders.