How to Create an Effective Cybersecurity Risk Assessment Matrix

Article Summary:
This article explores how to create a cybersecurity risk assessment matrix to identify, evaluate, and mitigate cyber threats. It emphasizes the growing threat landscape, particularly in light of recent attacks by ransomware groups like Medusa, and offers a step-by-step guide to using risk matrices as a practical, visual tool to strengthen an organization’s cybersecurity posture.

Cybersecurity Risk Assessment Key Insights:

• Cyber Risk Defined: Cybersecurity risk involves both the likelihood of a cyberattack and the impact it could have on business operations.
• Matrix Benefits: A risk assessment matrix categorizes threats by probability and severity, helping organizations prioritize the most critical risks.
• Step-by-Step Creation: Includes auditing assets, identifying threats, assigning risk levels, categorizing risks, and developing targeted mitigation strategies.
• Matrix Types: Can be simple (3×3) or granular (5×5), with color coding (green to red) to visualize threat levels.
• Ongoing Process: Cyber risk assessments should be continuous and aligned with emerging threats and evolving compliance requirements.
• Shadow IT: Risk assessments are point-in-time by nature, but shadow IT can put your security and compliance posture at risk between formal periodic assessments. Organizations need fast, automated ways to assess risk and make decisions on new and shadow IT, drawing from real-time information.

In March 2023, a cybercrime group called “Medusa” executed a successful ransomware attack against the Minneapolis Public School District (MPS). During the attack, Medusa stole an enormous 100GB of sensitive information from MPS and then demanded a ransom of $1 million for returning it. MPS refused to pay the ransom. In retaliation, Medusa leaked the information online, putting the private and professional lives of thousands of students and teachers at risk.

Since this incident, Medusa has executed many more high-profile ransomware attacks on many other organizations. When victims refuse to pay the ransom – and they often do – Medusa leaks the stolen information online or sells it to a willing buyer. Due to such data losses, the organizations often face crippling operational, financial, and reputational losses.

Medusa is by no means the only cybercriminal gang operating in cyberspace, nor is ransomware the only cyber risk facing modern organizations. From malware, ransomware, and data breaches, to phishing scams, insider threats, DDoS attacks, and cryptominers – the cyber risk landscape is already very large. And it’s getting larger by the day.

In this worrying landscape, you need to ask yourself:

• What can I do to protect my organization from the potentially crippling consequences of cyberattacks like ransomware?
• How can I understand, manage, and minimize the firm’s cyber risks?
• And how can I proactively strengthen its cybersecurity posture in an evolving risk landscape?

A cybersecurity risk assessment matrix can help you meet all these objectives.

But what is cybersecurity risk assessment matrix?

What does it look like?

What are its benefits?

And how can you leverage it for assessing and mitigating risks in your organization?

Keep reading to discover the answers.

What is a Cybersecurity Risk Assessment Matrix?

The National Institute of Standards and Technology (NIST) defines cybersecurity risk as the “effect of uncertainty on or within information and technology”. It is the risk related to the “loss of confidentiality, integrity, or availability of information” and also reflects the potential adverse impact of these losses on an organization’s operations.

Simply put, cybersecurity risk is the potential for loss or damage to your organization due to a cyberattack or data breach. The risk may have an external origin, such as a cybercriminal, hacktivist, a third-party vendor with weak security controls, and even a rogue nation-state. It can also originate internally, say, due to privilege misuse, employee sabotage, lax security practices, poor security awareness among staff, or shadow IT.

Regardless of the source of risk, it increases your organization’s susceptibility to cyberattacks. And even a single such attack can cause severe financial, reputational, and psychological losses. It can disrupt operations, lead to downtime; and result in lost sales, higher costs, and lower revenues. It can also lead to the theft of business-critical intellectual property that undermine the firm’s competitiveness, market position, customer relationships, and compliance posture.

The best way to avoid these problems is to understand and minimize your cybersecurity risk. And to do this, you need to measure its two intersecting components:

    i. the likelihood that it may result in a cyberattack

   ii. its possible severity (i.e., its potential consequences)

Quantifying these elements will help you to understand where the organization is at risk of a cyberattack. You’ll understand what needs protection and where security gaps exist. In addition, you’ll be able to determine what measures to implement to minimize risk and safeguard the company’s critical assets.

To quantify cybersecurity risk, a cybersecurity risk assessment matrix is a very useful tool.

What Does a Cybersecurity Risk Assessment Matrix Look Like?

A cybersecurity risk assessment matrix is a visual tool that depicts potential cyber risks. It considers both the factors mentioned in the previous section: the probability of occurrence of a risk event and its potential impact on the business. On the basis of these factors, it will help you categorize every cyber risk affecting your organization as “severe”, “high”, “moderate” (or “medium), “low”, “negligible”, and so on. Such categorization will help you to identify and prioritize the most severe risks, and implement appropriate measures to mitigate or eliminate them.

The matrix is a simple two-dimensional graph. One of its axes depicts the likelihood of a risk event occurring, and the other shows its severity or potential for damage.

You will first compile a list of all the risks facing the firm and then place each risk on the graph, depending on its likelihood and severity. When you finish doing this, all the risks will occupy a specific cell in the graph.

These matrices use a color coding system to help with risk categorization and prioritization. Typically, risks with the highest probability and/or highest severity are colored red, risks with medium probability and/or medium severity are colored yellow, and risks with low probability and/or low severity are colored green. You can use more colors, depending on what sized matrix you use.

For example, here’s what your organization’s 3×3 risk assessment matrix may look like:

RISK SEVERITY
High	Risk 1	Risk 4	Risk 7
Medium	Risk 2	Risk 5	Risk 8
Low	Risk 3	Risk 6	Risk 9
RISK PROBABILITY	Unlikely	Somewhat Likely	Very Likely

In this matrix:

• Risk probability is on the X axis and risk severity is on the Y axis.
• Green risks are the low-level risks that are unlikely to pose much damage if they do occur.
• Yellow risks are the medium-level risks. They are likely to cause some damage because they are either somewhat likely or very likely to occur, or because they have a high potential severity.
• Red risks are the high-level risks. They are most likely to cause damage so it’s important to prioritize them for mitigation in order to reduce the organization’s overall risk.

For a more granular cybersecurity risk assessment, you can use a 5×5 matrix. This matrix will have 5 rows and 5 columns, plus more colors to better depict each risk. Here’s an example:

RISK SEVERITY
Critical	Risk 1	Risk 6	Risk 11	Risk 16	Risk 21
High	Risk 2	Risk 7	Risk 12	Risk 17	Risk 22
Medium	Risk 3	Risk 8	Risk 13	Risk 18	Risk 23
Low	Risk 4	Risk 9	Risk 14	Risk 19	Risk 24
Negligible	Risk 5	Risk 10	Risk 15	Risk 20	Risk 25
RISK PROBABILITY	Very Unlikely	Somewhat Unlikely	Somewhat Likely	Likely	Very Likely

In this matrix:

• Green risks are the low-level risks. They are unlikely to cause much damage if they occur.
• Yellow risks are the medium-level risks. They are more likely to cause damage than the low-level risks.
• Amber risks are the high-level risks. You should review them carefully because they can cause some damage if they occur.
• Red risks are the critical risks. You should prioritize these risks and address them urgently. If you don’t, the consequences may be severe.

The above are just examples. You can customize a matrix with your own labels and colors as per your specific needs. What’s important is that you do create the matrix because it will guide and support your risk mitigation efforts.

How to Create a Cybersecurity Risk Assessment Matrix: A Step-by-step Guide

Now let’s take a look at how you can create a cybersecurity risk assessment matrix for your organization’s risk management program.

#1: Audit Your Environment

Before you can take action to mitigate risk, you first need to understand what you are trying to protect. What parts of the network infrastructure – endpoints, hardware, software, cloud workloads, data, and so on – could be at risk?

Create a comprehensive inventory of all the assets in your IT environment, including data. Also identify the assets that are critical to the business and its operations. Identifying and documenting your environment will help you to determine its possible risks and take action accordingly.

#2: Identify Relevant Cyberthreats and Vulnerabilities

Now that you know what your environment looks like, you can assess it to identify its cyberthreats and vulnerabilities. During this assessment, you may discover vulnerabilities like IT misconfigurations, software misconfigurations, excessive privileges for users, excessive privileges for apps and extensions, unpatched applications, or weak access controls. You may also find that the company is facing cyberthreats like malware, phishing, DDoS attacks, SQL injections, or insider attacks.

By identifying and documenting these threats and vulnerabilities, you can make plans to mitigate their impact. To help with this, it can be helpful to use reputable resources like the MITRE ATT&CK® framework and the National Vulnerability Database (NVD).

#3: Assess Threats by Likelihood and Potential Impact

Your asset inventory will give you a place to start your risk management efforts. You’ve also identified the vulnerabilities and potential threats to those assets. Use this information to calculate the risk levels of each asset.

Assess both the likelihood of attack and its potential impact to quantify the risk levels on the risk assessment matrix. The more granular your matrix (5×5 instead of 3×3), the better insights you will get into your risk posture.

#4: Categorize Risks

Use your risk assessment matrix to categorize risks. This step is important because it will help you to prioritize risks, allocate the right resources based on severity, and identify optimal risk responses.

#5: Develop Targeted Risk Management Strategies

Now that you’ve identified, categorized, and prioritized cyber risks, you can implement appropriate strategies to address them.

For example, you may decide to accept a low-severity risk instead of wasting resources on mitigating it. For a medium-severity risk, you may choose a transfer strategy. Here’s where you shift the responsibility for risk mitigation to a third party, such as an insurer.

Finally, you may implement measures to reduce a high-severity or high-probability risk and thus minimize its likelihood of occurrence and potential impact. These measures may include:

• zero-trust architecture
• least privilege access controls for users
• least privilege access control for apps, and extensions connecting to corporate networks and cloud workspaces
• update security settings for applications and browser extensions
• user behavior analytics to track risky users
• policy and compliance enforcement
•  multi-factor authentication (MFA)
• network segmentation
• a patching schedule for hardware and software
• a comprehensive password policy, and
• cyber-awareness training programs for employees

#6: Monitor Emerging Risks and Regulations

Cyber risk assessment with a risk assessment matrix should not be a one-time activity. Your risk landscape can change, so it’s important to conduct such assessments regularly. Also periodically refine the matrix so that it always reflects your current risk posture. In this way, it will help you stay updated on the latest risks, which is essential for effective and ongoing risk mitigation.

In addition to monitoring risks, it’s also important to monitor the compliance landscape. Regulations around security and privacy change almost as fast as risks. If you miss an update, you may have to pay hefty fines to the regulator. Non-compliance can also affect the firm’s reputation and customer relationships.

To avoid such problems, monitor the compliance environment. If possible, use automated tools to reduce the hassles of ongoing monitoring. These tools can also audit your compliance controls and notify you if a control is not-aligned with compliance guidelines or internal risk mitigation goals.

Simplify Application and Browser Extension Risk Assessments and Strengthen Your Risk Posture with SpinOne

Cybersecurity risk assessments are critical for protecting your organization from the multitude of risks lurking in cyberspace. By proactively identifying, analyzing, prioritizing, and mitigating risks, you can protect business-critical assets, strengthen the company’s cyber-resilience, and ensure its business continuity. And to strengthen and streamline this process, a risk assessment matrix can be an invaluable tool.

However, annual Risk Assessments incorporate your whole environment and typically result in an annual third-party, accredited auditor. But what about assessing risk in the moment, making decisions about changes to your environment on the fly?  Manually creating a risk matrix for and evaluating every single application or extension your employees seek to install just to get their work done day-to-day would be overwhelming. For example, suppose one user in Marketing requests an AI-assisted ChatGPT browser extension to simplify writing. At the same time, several people on your development team want to use a new app to speed up code reviews, and the whole accounting team needs a new calculation app that will streamline payments. 

Evaluating each of these manually would be time prohibitive, leading to frustrated users, stalled projects, and limited productivity. However, you still need to be able to document which apps are approved / disapproved, the criteria used to make these decisions, and the security controls in-place to prevent the installation of apps or browsers that would violate your overall security and compliance posture.

Fortunately, an easier alternative is available: SpinOne Risk Assessment.

This simple tool will automatically assess the cybersecurity, compliance, and business risks associated with every application and browser extension in your environment. Not only this, but it will also update risk scores for currently-installed applications when new versions are released to ensure the latest updates don’t contain malicious code or activities.  

Its powerful AI algorithms detect all the OAuth applications and browser extensions that have access to mission-critical data. SpinOne assesses the risk of all these apps and browser extensions and presents the results in a user-friendly format. It assigns a score to each asset, with each score color-coded to indicate the risk it imposes. Using this information, security teams can create policies that allow applications up to a selected risk threshold, and remove access to those whose risk scores surpass this limit. The result? You stay more secure between annual assessments, you automatically surface and enforce compliance for shadow IT / shadow AI, and you save time by streamlining decisions for new IT requests.

Use this information to implement appropriate measures to reduce your security, compliance, and data leak/loss risks.

SpinOne also provides more in-depth risk assessments and reports, as well as enhanced controls and customizable alerts. Take advantage of all these features to get deeper insights into your risk posture and implement more effective risk response strategies. Click here to know more about SpinOne and its Risk Assessment features.