Small Business Essentials: Understanding and Managing Your Risks

Small and medium-sized businesses (SMBs) face unique challenges regarding risk management. From natural disasters to cyber attacks, there are a variety of potential risks that can disrupt operations and harm the bottom line. However, by understanding and proactively managing these risks, SMBs can mitigate the potential impact and protect their business. This blog series explores critical risk elements, such as understanding threats, vulnerabilities, likelihood, and impact. We'll also discuss practical steps to establish a risk-based information security program, including data classification, evaluating critical information, and updating your risk management plan. Whether you're a new business owner or launching your startup, understanding and managing your risks is crucial to the success and longevity of your business.

Understanding and Managing Your Risks

Risk management involves evaluating potential hazards, assessing vulnerabilities, and determining the likelihood and impact of events that could harm your business. Making informed decisions about risk is a daily task, just like evaluating traffic and weather conditions while driving. A good information security program aims to provide peace of mind by ensuring you have taken steps to mitigate potential risks. While it's impossible to eliminate all risks, utilizing available resources such as professional experts can help you make the most informed decisions.

Elements of Risk

In the realm of information security, a threat refers to any potential source of harm that could negatively impact the information crucial to the operation of a business. These threats can manifest in various forms, such as natural disasters or human actions, and can be accidental or intentional. Some common examples of information security threats include:

• Environmental hazards such as fires, floods, tornadoes, and earthquakes

• Disruptions or failures of business resources, such as equipment or supply chain disruptions

• Malicious actors such as hackers, hacktivists, criminals, or nation-states.

Understanding the connection between threats and information security is crucial. One way to grasp this relationship is by considering the potential consequences of a specific threat, such as a flood. A flood can damage computers, servers, and documents, making it difficult or even impossible to access important information needed for business operations. Additionally, in the event of a severe flood, access to the affected area may be restricted, further hindering efforts to protect and retrieve vital information.

A vulnerability is a gap or weakness in security that an attacker can exploit to harm a business. Information that is not adequately safeguarded represents a vulnerability. Many information security breaches can be attributed to a few common vulnerabilities. Different types of threats can have varying effects on other businesses and industries. For example, an online retailer may be more concerned about website defacement than a business with little or no web presence. The likelihood of a threat impacting a business helps determine the necessary level of protection required.

The potential harm caused by a security incident varies depending on the type of information involved. A leak of marketing materials may not have as significant an impact on a business as the loss of sensitive customer information or proprietary data. The impact of a security event is influenced by the nature of the information affected, the specific business, and the industry it operates in.

Managing Your Risks

Risk management is the process of identifying the level of protection needed for different types of information and assets and then implementing and monitoring that protection. This blog provides simple steps for creating a risk-based information security program to help manage risks. Successful implementation of this process requires input and collaboration from various people within an organization, such as department heads, executives, legal, and IT. As an additional resource, it may be beneficial to involve your customers, particularly those with whom significant business is conducted.

It is important to regularly review and update your risk management plan at least once a year and whenever there are any changes to the business, such as changing procedures or acquiring new IT systems. Additionally, if any incidents occur among your business partners, suppliers, customers, or employees, use it as an opportunity to ensure that you are still properly protected.

Use Data Classification Best Practices

Implementing data classification best practices is crucial for effective risk management. It involves identifying the information's sensitivity level and assigning appropriate security controls accordingly. This can include designations such as Confidential, Private, Sensitive, or Public. This initial step can be challenging but important for risk management.

Begin by creating a list of all the different types of information that your business stores or utilizes. Define "information type" in a way that makes sense for your business. Encourage your employees to contribute to the list by identifying the information they regularly use to perform their job. List everything you can think of, but you do not need to be too specific. Examples of information that may be included are customer names and email addresses, receipts for raw materials, banking information, and any other proprietary information.

Determine the value of your information

Go through each information type you identified and ask these key questions:

• What would happen to my business if this information was made public?

• What would happen to my business if this information was incorrect?

• What would happen to my business if I/my customers couldn't access this information?

These questions relate to confidentiality, integrity, and availability and help determine the potential impact of an event. Another way to assess the criticality of different types of information is by assigning a score, such as a scale of 0 to 3 or "none," "low," "medium," and "high." It's important to note that determining the score for a specific type of information may require a team effort, as one person may not completely understand how the information is used throughout the organization.

Based on the scores assigned, prioritize the protection of different types of information by ranking them according to their importance to the continued operations of your business. For example, information with a high score should be given higher priority regarding protection, whereas information with a low score may require less stringent measures.

Develop an Asset Inventory

One of the golden rules of cybersecurity is to know what assets you have and where they are located. Without this information, developing effective strategies to safeguard your business from current and future attacks is impossible.

To effectively protect your business information, it's crucial to identify the technology used for storing, accessing, processing, and transmitting that information. This includes computers, tablets, mobile devices, and software applications. We recommend using an asset management system that allows you to see all your assets in one place and understand their current status, location, and usage. This can help you identify potential vulnerabilities and make informed decisions about how to protect your assets. Additionally, include any technologies outside of your business, such as cloud services, and any protection technologies in place, like firewalls and VPN appliances.

Understand your threats and vulnerabilities

All businesses face information security and cybersecurity threats and vulnerabilities. To better understand your vulnerabilities, it's important to conduct regular risk assessments that consider the specific characteristics of your business, such as your industry, location, and the types of data you handle. This will help you identify potential threats and vulnerabilities and assess their likelihood of impacting your business. Once identified, you can implement specific strategies to protect against those threats and vulnerabilities, such as implementing security controls or developing incident response plans. Additionally, it's important to stay informed of the latest security trends and threats in your industry to ensure that your risk assessments and security measures are up-to-date.

Penetration Testing

Conducting a penetration test can also help identify weaknesses in your network or system. A penetration test, also known as a pen test, is a form of ethical hacking that simulates a cyber attack on an organization's network, systems, and applications to identify vulnerabilities and weaknesses. The goal is to safely exploit these vulnerabilities and help eliminate them to improve your overall security posture.

Penetration testing should be conducted by experienced professionals trained to perform these types of tests in a safe and controlled manner. We recommended that all businesses commission pen testing at least once per year, with additional assessments following significant changes to your infrastructure, before product launches, mergers, or acquisitions. Companies that process substantial volumes of personal and financial data, or have strict compliance requirements to adhere to, should conduct pen tests with a higher frequency to ensure the protection of sensitive data and to comply with regulations.

It is important to note that penetration testing should be followed by a comprehensive report detailing the vulnerabilities found and recommendations for remediation.

Software Vulnerabilities

Vulnerabilities in software applications can provide hackers with an easy entry point into a network or system, making it essential to scan and assess them regularly. We recommend continuous vulnerability scanning for our clients. Our approach is designed to automatically scan your network in search of weak points. We can search for unpatched software, open ports, outdated operating systems, missing patches—all kinds of problems. We can quickly alert you to any issues. The cost for this service can vary widely— depending on the specific actions performed and the size or nature of the business being assessed.

API Vulnerabilities

APIs (Application Programming Interfaces) are powerful tools that enable different applications to communicate with each other, exchange data, and respond to commands. APIs provide a convenient way for developers to integrate with applications and leverage their data and functionality. However, APIs can also pose a security risk to your business if not properly secured.

APIs are often accessible via the internet and can be reverse-engineered by attackers. Therefore, it's important to take API security seriously and implement strong access controls, data governance, rate limiting, input validation, and threat detection. These security measures are essential to protect sensitive data that may be exchanged and to prevent unauthorized access, data breaches, and other security incidents.

Additionally, it's important to remember that the security of APIs should be regularly reviewed and updated to stay current with the latest security trends and threats.

We Can Help

When it comes to cybersecurity risk management, it's important to partner with an expert who can help you identify, manage, and mitigate your risks. Visit our website to learn more about our services and how we can help your business address and mitigate cybersecurity risks. Additionally, you can schedule a consultation to discuss your specific needs and learn how we can help you manage your risks.

About the Author: Melissa Thornton, CISSP

Melissa Thornton is a principal security consultant for Cybersecurity Advisory Group, specializing in providing SMBs and startup companies with cyber risk management advisory. As a former CEO with over 20 years of technology, business operations, and security experience, Melissa understands the unique challenges of running a business. As a trusted advisor, Melissa works with clients to develop clear strategies and implement best practices across the board. She's skilled at spotting risks—large or small—and ensuring they never become problems.

If your business is looking for a knowledgeable and collaborative cybersecurity partner, we would love the opportunity to work with you.