The digital era is upon us, and we find ourselves living in a world that's driven by technology. From social media to online stores, everything is accessible with just a click. Companies are no exception, and most organizations have already transitioned to digital platforms to streamline their operations.
While digital platforms may have revolutionized the way we do business, they have brought with them an increased risk of cybersecurity breaches. The risks do not just involve electronic means but human error as well. Without the appropriate risk and data management protocols in place, companies leave themselves vulnerable to data loss or cyber-attacks, which can result in substantial financial and legal consequences, loss of reputation, as well as compromising the trust and confidence of stakeholders.
It’s, therefore, essential for businesses to learn about the importance of risk management to protect their data.
Risk Management Overview
Risk management is a term used to describe the process of identifying, assessing, and managing potential risks to reduce or mitigate their impact on a business. In the case of data management, risks can include data loss or theft, cyber-attacks, natural disasters, or human error. To mitigate these risks, businesses need to establish policies and procedures that outline how data is collected, processed, stored, and destroyed.
Central to risk management is the effective management of data. Data management involves determining what data is essential, identifying who owns it, and determining how it should be accessed, handled, and stored. Businesses, therefore, need to be diligent in protecting their data against hackers, cyber-attacks, and physical theft.
Best Practices For Risk Management
The best way to manage risks is to prevent them from occurring in the first place. Companies should implement security measures that reduce the risk of data breaches, cyber-attacks, or system failures, such as:
1. Conduct Regular Security Audits and Risk Assessments
Regular security audits and assessments can help your organization identify potential security gaps, vulnerabilities, and threats. Audits can also help determine the effectiveness of current security measures in place and alert you to any necessary improvements.
Risk assessments, on the other hand, can help determine which assets are most valuable and should be protected with the strongest security and which are low-risk and require lighter security measures. Below are some key steps that businesses can adopt to mitigate potential risks:
- Identify potential Risks: Businesses can start by identifying all the possible data-related risks they can face, along with the likelihood and impact of each risk. This can be done by conducting a risk analysis to determine which risks pose a high or low risk to the business.
- Develop Risk Mitigation Strategies: Develop an action plan on ways to cope with and manage the risks effectively. This can be done by assigning specific roles and responsibilities to key personnel, implementing necessary procedures and controls, having alternative suppliers or redundancy plans, or developing crisis management plans.
- Employee Training and Awareness: Employees must understand the importance of risk assessment and their role in mitigating potential risks. A Ropes & Gray Report revealed that the employees of 52% of companies are compliant out of duty and obligation. Risks that can put the company’s data and security at risk include misuse of employee badge access systems or employees utilizing weak passwords.
Businesses can conduct staff awareness training, provide relevant resource material, launch an internal marketing campaign, or develop a yearly training program. Training should be regular and consistent so employees are always up-to-date with new risks and emerging trends.
2. Establish Data Security Policies and Procedures
Writing and implementing data security policies and procedures can help establish clear guidelines and expectations for employees, vendors, and other third parties on the appropriate use of data. Creating policies around access control, data classification, password management, and other data security protocols can significantly reduce human error and prevent unauthorized access to sensitive information.
3. Provide Training on Data Security
Despite the best security measures in place, human error remains the most common cause of data breaches. The Global Risks Report 2022 by the World Economic Forum states that humans were responsible for 95% of cybersecurity threats.
Employees can fall victim to social engineering attacks, phishing scams, or other forms of cyber threats that compromise data security. Even the best security protocols are ineffective if employees do not understand protocols or aren't aware of the risks associated with data breaches. Below are a few points why employee training is vital:
- Employee training programs can inform staff about data security best practices, identify warning signs of potential threats or scams, and give them the tools and knowledge to avoid or respond to such hazards.
- Training employees on data security not only helps prevent data breaches but also increases employee awareness and accountability. Employees who recognize the value of data security are more likely to take proactive measures to prevent security incidents.
- Implementing a data security training program demonstrates to employees that the company takes data security seriously. It also fosters a culture of security where employees understand their role in safeguarding sensitive data. With a culture of security, employees are less likely to make errors or engage in risky behaviors that can compromise data security.
4. Limit Access to Data
Minimizing the number of users with access to sensitive data can reduce the risk of cyber-attacks. Below are some ways to implement it effectively:
- Identify and Classify Sensitive Data: Sensitive data can be classified based on the level of confidentiality, availability, and integrity.
- Implement Role-Based Access Control: RBAC provides a granular approach to limiting access by allowing access based on job roles and responsibilities. This means that employees only have access to the data they require to perform their job duties.
- Strong Password Protection: Did you know that 30% of internet users faced data breaches due to weak passwords, and the most common password is “123456”? Passwords are the first line of defense against unauthorized access to data. For maximum security, you must establish password policies that mandate password complexity, length, and uniqueness to prevent hackers from cracking them.
Additionally, implementing two-factor authentication further strengthens password protection by requiring a security token along with a password for access.
- Network Security Measures: Network security measures such as antivirus, firewalls, intrusion detection, and prevention systems can help identify and control any unauthorized access to the network.
5. Implement Data Backup and Recovery Processes
Data backup and recovery processes are essential for recovering critical company data in the event of a natural disaster or cyber-attack. An effective backup and recovery process includes regular offsite backups, which store copies of critical company data in a secure location. Regular testing is also necessary to ensure that data can be recovered promptly and accurately.
6. Conduct Regular Vulnerability Scans and Monitoring
In an increasingly sophisticated threat landscape, conducting regular vulnerability scans and monitoring should be a top priority. This process can help pinpoint potential vulnerabilities in the system and identify potential security risks.
7. Prepare A Response Plan for Potential Data Breaches or Cyber-Attacks
Having a response plan in place is critical in the event of a data breach or cyber-attack. A response plan should contain clear steps, including who is responsible for carrying out each task and how to notify key stakeholders such as customers, vendors, or shareholders of the breach.
Digitization presents both opportunities and threats for businesses. Risk management is critical, and businesses that don't adequately address cybersecurity threats are at risk of significant damage to their reputation and financial loss. While businesses may invest heavily in prevention measures, they should also have a comprehensive platform for it. Having a risk management plan that addresses prevention through detection and education to respond can safeguard businesses against cyber threats.
It’s crucial to understand that risk management is not a one-time deal but a continuous process that requires ongoing monitoring, review, and improvement. As emerging trends, technologies, and threats associated with data management evolve, so too must your risk management strategies. Professional IT services, internal IT departments, and ongoing staff training undergo continuous development to support the necessary security measures. By following these best practices, a business will be better prepared to deal with risks and achieve its goals.