What Is Digital Risk?

Digital risk broadly refers to the potential threats and vulnerabilities that arise from using digital tools, platforms and technologies. Assessing digital risk on the organisational level examines all of the negative consequences that can result from digital transformation. While going digital is critical to scaling a business, it also means relying more heavily on digital solutions.

Digital risk is an unavoidable by-product of digital transformation and new technology, and it requires focusing on vulnerabilities that may hinder achieving business objectives. While there are many types of digital risk, the most critical type arises from an increased attack surface, giving cybercriminals more entry options to target.

As the digital landscape continues to evolve, so do the challenges associated with securing data, maintaining privacy, and ensuring system integrity. Digital risk encompasses a wide range of concerns, from cyberthreats to data breaches, and from regulatory non-compliance to reputational damage. Understanding and managing digital risks is crucial for businesses and individuals alike to safeguard assets, reputation and personal information in the digital age.

The complexity of the digital risk landscape can be simplified by segmenting risks into different categories. Digital risk is comprised of nine primary categories, including:

1. Cybersecurity risk. This refers to the potential for unauthorised access, disruption or malicious activities targeting digital assets, systems or networks. It emphasises threats like malware, phishing and cyberattacks that can compromise data and infrastructure.
2. Cloud Technology risk. Pertains to vulnerabilities associated with storing data and running applications on remote servers. Risks include potential service outages, data breaches and reduced control over proprietary data.
3. Data Leaks risk. Involves the unintentional exposure of sensitive or confidential information, either internally or externally. Such leaks can result from weak security measures, human errors or system malfunctions.
4. Workforce talent risk. Centres on the challenges in attracting, retaining and training skilled personnel in the digital domain. A lack of qualified professionals can lead to operational inefficiencies and increased vulnerabilities.
5. Compliance risk. Relates to potential legal penalties and reputational damage from failing to adhere to regulatory requirements in the digital realm. Non-compliance can lead to fines, sanctions and loss of trust.
6. Resilience risk. Focuses on an organisation’s ability to anticipate, respond to, and recover from adverse cyberevents. A lack of resilience can lead to prolonged downtimes, operational disruptions and reputational damage.
7. Process automation risk. Concerns about the challenges and vulnerabilities of automating digital processes. These risks include software bugs, system failures or unintended consequences of automation on business operations.
8. Third-party risk. Relates to the potential vulnerabilities introduced by external partners, vendors or suppliers. If these third parties lack adequate security measures, they can become weak links in an organisation’s defence chain.
9. Data privacy risk. Involves potential threats to the privacy of individuals’ personal data. This stems from unauthorised access, data misuse or non-compliance with data protection regulations.

Each category has unique characteristics and requires a different approach to managing digital risk effectively. For example, cybersecurity risk refers to unauthorised access to sensitive resources and data breaches. Cloud technology risk refers to vulnerabilities affecting systems, processes and people, which could stem from tech-related incompatibilities, errors and failures.

By understanding the different types of digital risk, organisations can identify the most vulnerable areas of their ecosystems and support highly targeted risk protection efforts. That way, organisations can manage digital risks more effectively and efficiently.

Digital risk protection is a set of practices and methodologies to safeguard an organisation’s digital infrastructure against ever-increasing digital threats. Digital risk protection solutions operate on the premise that organisations can use cybercriminal activity to their advantage to identify attacks before they happen.

There are several forms of digital risk protection (DRP), including:

• Cybersecurity strategies: Cybersecurity strategies must shift to a proactive, people-centric approach to protection. This is key to supporting ecosystem expansion while mitigating risk. Mitigating cyberattack risks is a critical part of DRP efforts.
• Digital footprinting: Digital footprinting involves discovering and mapping all digital assets exposed to potential threats. It is a critical part of digital risk protection and security awareness efforts.
• Continuous monitoring: Continuous monitoring of the security state of all exposed assets is essential to mitigate digital risk. This includes monitoring for vulnerabilities, threats and attacks.
• Threat intelligence: Threat intelligence solutions focus on improving security postures to help organisations withstand cyberattack attempts. They provide actionable insights into the latest threats and vulnerabilities.
• Digital risk protection service: Organisations with a complex digital landscape will achieve greater financial efficiency by investing in a digital risk protection service, often called DRPS. A DRPS is a comprehensive managed service that typically offers a platform, system or other technology to spearhead cybersecurity threat prevention.
• Multidimensional threat analysis: DRP solutions translate millions of data points into actionable business intelligence using multidimensional threat analysis, digital footprint contextualisation and threat evolution tracking.
• Sensitive data leakage monitoring: DRP solutions can monitor for sensitive data leakage, a valuable way for cybercriminals to exploit systems.

By implementing these forms of digital risk protection organisations can mitigate digital risk and confidently embrace the digital transformation necessary to scale in a fast-paced era.

Managing digital risk is a multi-faceted endeavour that requires a comprehensive defence-in-depth approach. Here are steps organisations can take to effectively manage their digital risks:

1. Risk Assessment

The process of risk assessment is the foundational cornerstone of digital risk management. Every organisation must begin by identifying its digital assets, encompassing everything from data and software to hardware and intellectual property. By leveraging various tools and assessments, they can pinpoint potential vulnerabilities and threats to these assets. The goal is to identify and evaluate each threat’s likelihood and potential impact.

2. Develop a Digital Risk Framework

Once an organisation has a clear picture of its assets and potential threats, the next step is crafting a digital risk framework. This framework priorities risks based on their potential impact and probability. Central to this framework is determining the organisation’s risk tolerance, which will guide subsequent decisions on whether to accept, mitigate, transfer or avoid certain risks.

3. Implement Proactive Measures

Defending the digital frontier demands a proactive approach. This encompasses implementing robust network defences such as firewalls and intrusion detection systems. Additionally, tools like antivirus software, complemented by regular patching routines, bolster endpoint security. Of equal importance is protecting data through encryption techniques, access controls and maintaining regular backups of pivotal data to ensure data integrity and availability.

4. Educate and Train Employees

Employees are both an organisation’s first line of defence and a potential vulnerability. Regular security awareness training sessions empower them with knowledge about emerging threats, especially common ones like phishing scams. Simulated attack scenarios can be an effective way to test and reinforce this knowledge.

5. Monitor and Respond

In the digital realm, vigilance is key. By deploying continuous monitoring tools, such as SIEM systems organisations can actively survey for anomalies. Paired with a robust incident response plan, they can ensure swift and decisive action when threats emerge.

6. Regularly Update and Patch

The digital landscape is ever-evolving and with new technology adoption come new vulnerabilities. Regular software and system updates, complemented by timely patching, safeguard against many of these emerging threats, ensuring the organisation stays one step ahead.

7. Manage Third-party Risks

Third-party vendors can often introduce unforeseen vulnerabilities. As an integral component of Cyber Supply Chain Risk Management (C-SCRM), it’s essential to rigorously vet these external entities for their security protocols. Continuous oversight and monitoring of their activities and access levels are pivotal in ensuring they don’t inadvertently become weak links.

8. Plan for Resilience

Unforeseen cyberevents are a reality and planning for them is not a luxury but a necessity. Developing a disaster recovery plan and ensuring robust business continuity practices are crucial. Regularly testing these protocols ensures that the organisation can bounce back in the face of adversity with minimal disruption.