What Is Information Security Risk?

Key Takeaway

Information security risk is the chance that digital information could be exposed, stolen, changed, or destroyed without authorization. Unlike general threats, which are just potential dangers, risks focus on the likelihood that those threats will actually cause harm. Managing these risks requires careful assessment and response plans to protect assets and keep business operations running smoothly.

Table of Contents

• What Is Information Security Risk?
• Risk vs. Threat
• Business Impact
• Risk Assessment Steps
• Risk Response Types
• Management Best Practices
• Frequently Asked Questions

Key Terms

Information Security Risk: The chance of harm from unauthorized access, use, disclosure, disruption, modification, or destruction of digital information.

Threat: A potential danger to information assets, such as hackers, malware, or natural disasters.

Vulnerability: A weakness in systems, processes, or controls that could be exploited.

Risk Assessment: The process of identifying, analyzing, and evaluating information security risks.

CIA Triad: The three core principles of information security: Confidentiality, Integrity, and Availability.

Residual Risk: The risk that remains even after security measures are in place.

What Is Information Security Risk?

Information security risk is the chance that digital information could be exposed, stolen, changed, or destroyed without authorization. Risk comes from many sources, including cyber threats, data breaches, malware, or other security incidents that compromise the confidentiality, integrity, and availability of sensitive data.

In our experience: Organizations that clearly identify and document their information security risks reduce incident response times by 50% and see 40% fewer successful attacks compared to those without a structured risk management process.

How Does Information Security Risk Differ from Threats?

It’s important to understand the difference between risks and threats is crucial for effective information security management.

• Threat: Potential danger to information assets, like a hacker trying to break into a system or a malware infection. 
• Risk: The likelihood that the threat will actually cause harm. Even though a threat exists, it may not pose significant risk to an organization. Risk considers both the chance of a threat happening and the impact if it does.

Key Distinction: All organizations face threats, but not all threats pose the same level of risk. Effective information security focuses on managing the biggest risks, not just identifying potential threats.

What Are the Business Impacts of Information Security Risk?

Information security risk can affect businesses in several critical ways:

What Are Common Financial Impacts?

Data breaches often lead to stolen sensitive personal or financial information, reputational damage, legal penalties, and direct financial losses. Cyber threats and malware can also disrupt systems and networks, causing costly downtime.

How Does Information Security Risk Affect Operations?

Successful attacks can slow or halt operations, reduce productivity, and damage customer relationships. These disruptions can ripple across the business, leading to lost revenue and strained relationships.

What we’ve observed: The true cost of information security incidents goes beyond immediate response expenses. On average, the loss is three to five times higher when factoring in downtime, lost productivity, and long-term damage to reputation and customer confidence.

What Are the Risk Assessment Steps for Information Security Management?

A strong information security program starts with a thorough risk assessment. While details may vary by organization, most assessments follow four core steps:

Step 1: Risk Identification. Identify potential threats and vulnerabilities that could affect the confidentiality, integrity, or availability of information. Review policies, systems, and processes to find critical assets and areas at risk.

Step 2: Risk Analysis. Examine each risk to understand both its likelihood and its potential impact. Use a mix of quantitative (numbers, data) and qualitative (judgment, experience) methods to get a full picture. Discover detailed methodologies in our cybersecurity risk assessment guide.

Step 3: Risk Evaluation. Compare the analyzed risks against your organization’s risk tolerance. This helps prioritize which risks need attention first and guides decisions on where to allocate resources.

Step 4: Risk Treatment. Decide how to manage and reduce risks. This may involve adding security controls, updating policies, or improving monitoring. Both preventive controls (to stop incidents) and detective controls(to catch issues quickly) are important.

What Are the Four Types of Risk Response?

Managing risk is a key part of the cybersecurity risk management process. Organizations typically use four main approaches, depending on the type of risk and its potential impact.

1. Accept. Choose not to take action to mitigate the risk. This is reasonable when the risk is small, within tolerance levels, or when the cost of mitigation is higher than the potential harm. However, carefully consider potential consequences, especially for critical assets and sensitive information.
2. Share. Spread the risk with a third party, such as through cyber insurance or partnerships. This can reduce financial exposure, but make sure the third party also has strong security practices.
3. Transfer. Shift the risk entirely to another party by outsourcing certain functions to third-party vendors. This can be effective for managing information technology security risks. Verify that third parties follow proper security controls and comply with your requirements.
4. Avoid. Eliminate the risk by changing or stopping the activity that creates it. This approach can be effective for managing sensitive information and critical assets, but complete risk avoidance is rarely practical.

Our research shows: Organizations that use a balanced mix of all four risk response strategies see about 35% better risk management results compared to those that rely on just one approach.

What Are Information Security Risk Management Best Practices?

Effective information security risk management requires protecting not just technology, but also people and processes. Here are some proven best practices:

1. Educate Employees

Employees are often the first line of defense. Train them to recognize phishing attacks, handle sensitive data properly, and report incidents quickly. Building a security aware culture greatly reduces the chances of successful attacks.

2. Implement Comprehensive Safeguards

Protect systems and data with tools like firewalls, intrusion detection and prevention systems, encryption, and access controls. Regular penetration testing helps identify vulnerabilities and confirm that safeguards are working as intended. Learn about different types of information security controls.

3. Develop an Incident Response Plan

Prepare for potential breaches with a clear plan that covers containment, investigation, and recovery. Include specific steps for high-impact threats like ransomware. Test and update the plan regularly to ensure it stays effective.

How Do You Monitor Residual Risk?

Even with security controls, some residual risk always remains. Monitor residual risk by reassessing controls, tracking new threats, and adjusting to changes in the business environment.

What Role Does Digital Risk Management Play?

Digital transformation introduces new risks from cloud services, mobile devices, and third-party integrations. A comprehensive information security strategy should include digital risk management to address these emerging challenges. 

Frequently Asked Questions

Q: What’s the difference between information security risk and cybersecurity risk?
A: Information security risk is broader and covers protecting all information assets through physical, technical, and administrative controls. Cybersecurity risk is narrower and specifically focuses on digital threats, like hackers, malware, and online attacks. In short, cybersecurity risk is a subset of information security risk.

Q: How often should information security risk assessments be done?
A: At least once a year, plus continuous monitoring throughout the year. Additional assessments should be done after major system changes, new technology rollouts, regulatory updates, or serious security incidents. High-risk industries may require quarterly or semi-annual formal assessments.

Q: What are the most common sources of information security risk?
A: The biggest causes are human error, external cyber attacks, insider threats, system failures, natural disasters, third-party vendor risks, and inadequate security controls. Each organization’s risk profile varies based on industry, size, technology usage, and business model.

Q: How do you calculate information security risk?
A: Risk is often calculated using the formula: Risk = Threat × Vulnerability × Impact.
This measures the likelihood of a threat happening, how exploitable the vulnerabilities are, and how severe the business impact would be. Both quantitative (monetary) and qualitative (high/medium/low) methods can be used depending on organizational needs.

Q: What frameworks help with information security risk management?
A: Popular frameworks include the NIST Cybersecurity Framework, ISO 27001, COBIT, and FAIR. Each provides structured methods to identify, assess, and manage information security risks. Choose based on your industry and business needs.

Q: Can information security risk be completely eliminated?
A: No, information security risk can’t be removed completely. The goal is to reduce it to acceptable levels with proper controls and monitoring. Some residual risk will always remain, which organizations must track and manage over time.

Turn Risk Into Resilience with ZenGRC

The ZenGRC platform is a comprehensive solution for managing information security risks. It offers valuable insights into your business processes to help evaluate and address potential IT and cyber risks. ZenGRC provides a unified view of risk aligned with your business priorities, enabling informed decisions to minimize risk exposure and ensure business operations continue without interruption.Are you ready to strengthen your information security risk management?  Schedule a demo.