What Is Risk Management?

The Importance of Risk Management

The threat landscape has never been more complex, and with most of today’s business conducted digitally, data has never been more vulnerable. Organizations need to take inventory of their cyber risk management processes and put together a plan that not only seeks to monitor risk but also mitigates it and delivers actionable insights amid unforeseen circumstances, such as cyberattacks.

What’s more, amid increasingly stringent compliance regulations, organizations need to bolster risk identification, tighten security, and more effectively manage vulnerabilities. Plus, as IoT, OT, and GenAI continue to proliferate, additional attack vectors and areas of vulnerability will surface, increasing our risk.  The more quickly and accurately an organization can identify potential risks, the better they’ll be able to protect their business from accidental and malicious compromises.

Types of Risk

In the context of cybersecurity, organizations face five key categories of risks that can impact their overall security posture.

• Strategic risk arises when cybersecurity decisions are misaligned with the organization’s long-term goals, potentially leading to costly and ineffective outcomes.
• Operational risk involves disruptions in daily cybersecurity operations, such as system failures or human errors, that could expose vulnerabilities or lead to data breaches.
• Financial risk refers to the potential financial losses due to cyberattacks, including costs associated with remediation, legal fees, and fines.
• Compliance risk relates to the risk of failing to adhere to cybersecurity regulations and standards, potentially resulting in penalties and legal action.
• Reputational risk is the potential damage to an organization’s public image or customer trust following a cybersecurity incident, which can have long-term business consequences.

By addressing these distinct types of risk, organizations can ensure a more comprehensive approach to safeguarding their operations and objectives. In the next section, we’ll cover the risk management process step by step.

The Risk Management Process

Now that we understand the various types of risks in cybersecurity, we can establish a structured process to manage them. Here is how organizations should go about managing risks.

• Identify: Pinpoint potential cybersecurity risks by evaluating systems, networks, and processes. Identify vulnerabilities, threat actors, and potential attack vectors. 
• Assess: Analyze the identified risks to determine their likelihood and potential impact. Prioritize them based on factors such as severity, business criticality, and exposure.
• Control: Develop and implement strategies to mitigate or eliminate risks. This could involve investing in rigorous cybersecurity and data protection measures as well as implementing a holistic risk quantification framework.
• Monitor: Continuously track the effectiveness of implemented controls. Regularly update risk management strategies to adapt to evolving threats and emerging vulnerabilities.

In the next section, we’ll take a look at how larger organizations with greater risk profiles manage and mitigate them.

Enterprise Risk Management (ERM)

Unlike traditional risk management, which often focuses on specific threats or projects, enterprise risk management (ERM) holistically identifies, assesses, and manages risks across an entire organization. By doing so, ERM enables organizations to manage uncertainty in a structured way and align risk management with business objectives.

While both ERM and traditional risk management aim to mitigate risk, ERM takes a comprehensive view of potential risks and opportunities, embedding risk considerations into the organization’s strategy and decision-making processes. Below are some key differentiators when it comes to ERM:

• Holistic scope: ERM addresses risks across all areas of the organization, encompassing strategic, operational, financial, compliance, and reputational risks, rather than focusing on isolated risks.
• Strategic alignment: ERM ties the risk management process directly to the organization’s long-term goals and strategy, ensuring that risk considerations are part of strategic planning.
• Cross-functional involvement: ERM requires collaboration across various departments and levels, ensuring that risk insights are shared and addressed organization-wide, rather than siloed in specific teams.
• Proactivity (vs. reactivity): ERM emphasizes a forward-looking, proactive approach to identify emerging risks and opportunities, whereas traditional risk management often responds to known or past risks.

Vulnerability Management vs. Risk Management

Vulnerability management (VM) and risk management are often used interchangeably—yet they represent distinct practices with different scopes and objectives. While both are integral components of a comprehensive cybersecurity strategy, understanding their differences and interconnections is crucial for creating a resilient defense framework.

VM is a continuous process that identifies, evaluates, prioritizes, and mitigates known security weaknesses within an organization's systems, networks, and applications. Organizations implement vulnerability management programs to reduce their attack surface—that is, to close open doors before malicious actors can walk through them.

Key characteristics of vulnerability management include:

• Identification: Scanning systems and networks for known vulnerabilities, such as unpatched software, misconfigurations, or outdated protocols.
• Prioritization: Not all vulnerabilities pose the same level of threat. Vulnerability management involves assessing the severity of each and prioritizing remediation based on factors like the Common Vulnerability Scoring System (CVSS) score, asset criticality, and exploitability.
• Remediation: After vulnerabilities are identified and prioritized, they are patched, mitigated, or accepted based on the risk they pose and the organization's resources.
• Continuous monitoring: Since new vulnerabilities are discovered regularly, vulnerability management is not a one-time activity but an ongoing, iterative process.

Why Organizations Need Both

Organizations cannot rely solely on vulnerability management or risk management; they need both to ensure a robust cybersecurity posture. 

Vulnerability management addresses specific, often technical, weaknesses that attackers could exploit. However, even if an organization successfully patches all known vulnerabilities, other risks—such as human error, insider threats, or attacks on third-party vendors—remain. Risk management, on the other hand, provides a broader, strategic framework that includes vulnerability management as one component. 

By integrating these two practices, organizations can take a more comprehensive approach to cybersecurity, ensuring that both immediate technical issues and long-term strategic risks are addressed.

Risk Management Best Practices

Before your team can implement risk management in line with best practices, it’s important to understand that risk management is a process, not a solution. Below are four key strategies risk management teams should prioritize:

• Regularly assess and update security protocols. Continuously review and enhance your security measures to stay ahead of evolving threats, ensuring that outdated technologies or processes don't leave gaps in your defenses.
• Implement multifactor authentication (MFA). Strengthen access control by requiring multiple forms of verification, reducing the risk of unauthorized access to sensitive systems and data.
• Conduct frequent employee training. Educate staff on recognizing phishing, social engineering, and other common attack vectors, as human error remains one of the most significant cybersecurity risks.
• Invest in comprehensive risk management. Leverage a holistic approach to identify, measure, and prioritize risks across your organization, ensuring informed decision-making, advanced threat measures, and, yes, vulnerability management.

Zscaler for Risk Management

Zscaler offers a comprehensive array of products and services designed to help your organization reduce and mitigate potential risks—no matter where or how they may arise. 

• Risk360 is a comprehensive and actionable risk framework that delivers powerful cyber risk quantification with intuitive risk visualizations, granular risk factors, financial exposure detail, board-ready reporting, and detailed, actionable security risk insights you can immediately put into practice for mitigation.
   
• Unified Vulnerability Management correlates security findings and context spanning identity, assets, user behavior, mitigating controls, business processes, organizational hierarchy, and more. These rich insights bring your most important security gaps into focus, empowering you to meaningfully reduce your risk.
   
• Deception proactively lures, detects, and intercepts the most sophisticated active attackers with decoys and false user paths, adding a powerful layer of high-fidelity threat detection to your entire enterprise. 
   
• Identity Threat Detection and Response protects users with continuous visibility into identity misconfigurations and risky permissions. Detects and stops identity-based attacks such as credential theft, multifactor authentication bypass, and privilege escalation.
   
• Breach Predictor uses AI-powered algorithms that analyze patterns in security data, using attack graphs, user risk scoring, and threat intelligence to predict potential breaches, offer real-time policy recommendations, and enable teams to take preemptive action.

Want a personalized look at Zscaler for Risk Management? Schedule a custom demo and let our experts show you how we can help you reduce and mitigate risk across the board.