The importance of business risk assessment
Businesses face many risks every day. In fact, the entire concept of doing business is inherently risky. Statista ranks cyber incidents, business interruption, natural catastrophes, pandemic outbreaks, and changes in trade legislation as the top five risks to businesses worldwide. Running a business entails managing such risks and incorporating them into the main business strategy. And a big part of risk management in business involves risk assessment.
What is business risk assessment?
Risk assessment is the process of identifying potential hazards that could harm the business or its dependencies, determining the likelihood and severity of those hazards, and laying out the necessary measures or steps to mitigate the identified risks. It paints a clear picture of the threat landscape and its meaning to the business. This essentially forms the basis of proactive threat mitigation.
The ultimate goal of performing a risk assessment is to prepare the business to combat various threats, which is vital in developing business resilience and continuity. It helps protect the business’s assets, employees, trade interests, and legal compliance.
How to conduct a risk assessment
A risk assessment can be done periodically on a regular schedule or before trying something new, such as venturing into new markets or making substantial changes to the business IT or enterprise processes. There are no set rules or procedures for carrying out a risk assessment. But, here’s a general step-by-step guide to assessing business risks that guarantees efficiency and outcomes.
Identify the hazards
Hazard or threat identification is the first step in assessing business risks. Identify all the hazards that your assets, business, or employees face. These could be cyberattacks, natural disasters, workplace accidents, vandalism, supply chain interruptions — you name it. Of course, the number and types of the hazards will depend on the business’s nature, model, size, location, and operations. But some threats, such as cybercrime and business interruptions, universally affect nearly all businesses.
Examine every aspect of your business thoroughly, from HR and IT to public relations, to identify any external or internal elements that could potentially jeopardize business operations.
Determine the scope of potential damage
Take each hazard you’ve identified in step-1 and figure out who or what it might harm and how. For instance, if you’ve identified a data breach as a potential hazard, determine the IT systems that might be vulnerable and how a breach might affect the organization’s ecosystem.
Evaluate the risks
How likely is it that the threats will occur? Statistically speaking, some threats are more probable than others. Take DDoS attacks, for example. NetScout logged about 5.4 million DDoS attacks in H1 2021, which works out to 30,000 attacks per day. So, a DDoS attack might be more likely to occur than, say, a lightning strike.
Calculating a threat’s likelihood gives you its risk factor. From there, you can prioritize risks and determine the most effective and practical mitigation measures.
Document the findings
Ensure to document the entire risk assessment process, from the preliminary stages to the final results. More importantly, implement your findings. The documentation will serve as a helpful reference and a template for future risk assessments.
Review and update the risk assessment
Threats keep evolving as external factors and the business itself change over time. That means you can’t set risk assessment in stone. Risks need to be revised and updated to reflect the prevailing business atmosphere. Conducting regular risk assessments and continuously updating your risk management strategy keeps your business ahead of emerging threats.
Cybercrime is among the top threats facing modern businesses. Mitigate this inevitable risk by partnering with GB Tech. Our managed IT solutions ensure that your business, employees, and digital assets remain safe while utilizing the latest enterprise IT solutions. Reach out to learn more.
