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Risk Assessment Policy Guidance
Ethan Heller avatar
Written by Ethan Heller
Updated over a week ago

The following article contains guidance explaining portions of the Risk Assessment Policy that we frequently see questions around, explaining what the sections mean.

Guidance statements will appear in bold and enclosed in brackets “[]” below the statements of the policy.

Risk Assessment Policy

[COMPANY NAME]

____________________________________________________________________________

Purpose

The purpose of this policy is to define the methodology for the assessment and treatment of information security risks within [COMPANY NAME], and to define the acceptable level of risk as set by [COMPANY NAME]’s leadership.

Scope

Risk assessment and risk treatment are applied to the entire scope of [COMPANY NAME]’s information security program, and to all assets which are used within [COMPANY NAME] or which could have an impact on information security within it. This policy applies to all employees of [COMPANY NAME] who take part in risk assessment and risk treatment.

Background

A key element of [COMPANY NAME]’s information security program is a holistic and systematic approach to risk management. This policy defines the requirements and processes for [COMPANY NAME] to identify information security risks. The process consists of four parts: identification of [COMPANY NAME]’s assets, as well as the threats and vulnerabilities that apply; assessment of the likelihood and consequence (risk) of the threats and vulnerabilities being realized, identification of treatment for each unacceptable risk, and evaluation of the residual risk after treatment.

Policy

Risk Assessment

  • The risk assessment process includes the identification of threats and vulnerabilities having to do with company assets.

  • The first step in the risk assessment is to identify all assets within the scope of the information security program; in other words, all assets which may affect the confidentiality, integrity, and/or availability of information in the organization. Assets may include documents in paper or electronic form, applications, databases, information technology equipment, infrastructure, and external/outsourced services and processes. For each asset, an owner must be identified.

  • The next step is to identify all threats and vulnerabilities associated with each asset. Threats and vulnerabilities must be listed in a risk assessment table. Each asset may be associated with multiple threats, and each threat may be associated with multiple vulnerabilities.

  • For each risk, an owner must be identified. The risk owner and the asset owner may be the same individual.

  • Once risk owners are identified, they must assess:

    • Impact for each combination of threats and vulnerabilities for an individual asset if such a risk materializes.

    • Likelihood of occurrence of such a risk (i.e. the probability that a threat will exploit the vulnerability of the respective asset).

    • Criteria for determining impact and likelihood are defined in the tables below.

  • The risk level is calculated by multiplying the impact score and the likelihood score.

[The Risk Assessment can be completed using Drata’s ‘Risk Assessment’ or ‘Risk Management’ modules. For information about Drata’s included Risk Assessment module, please see here: https://help.drata.com/en/articles/4770255-how-does-the-risk-assessment-process-work-in-drata?q=risk+management. If you have purchased the ‘Risk Management’ module within Drata, you would instead rely on that module to conduct the risk assessment. For more information on Drata’s Risk Management module, please see here: https://help.drata.com/en/articles/6406513-risk-management]

Description of Impact Levels and Criteria:

Impact Value

Definition

Incidental (1.0)

  • Minimal loss/damage

  • Local media attention quickly remedied

  • Not reportable to regulator

  • Isolated staff dissatisfaction

Minor (2.0)

  • Minor financial loss

  • Local reputational damage

  • Reportable incident to regulator, no follow up

  • General staff morale problems and increase in turnover

Moderate (3.0)

  • Moderate financial loss

  • National short-term negative media coverage

  • Report of breach to regulator with immediate correction to be implemented

  • Widespread staff morale problems and high turnover

Major (4.0)

  • Significant financial loss

  • National long-term negative media coverage; significant loss of market share

  • Report to regulator requiring major project for corrective action

  • Some senior managers leave, high turnover of experienced staff, not perceived as employer of choice

Extreme (5.0)

  • Massive financial loss

  • International long-term negative media coverage; game-changing loss of market share

  • Significant prosecution and fines, litigation including class actions, incarceration of leadership

  • Multiple senior leaders leave

Description of Likelihood Value and Criteria:

Likelihood Value

Description

Rare (1.0)

Once in 100+ years (<10% chance of occurrence over the life of the company)

Unlikely (2.0)

Once in 50 to 100 years (10% to 35% chance of occurrence over the life of the company)

Possible (3.0)

Once in 25 to 50 years (35% to 65% chance of occurrence over the life of the company)

Likely (4.0)

Once in 2 to 25 years (65% to 90% chance of occurrence over the life of the company)

Almost Certain (5.0)

Up to once in 2 years (90% or greater chance of occurrence over the life of the company)

[These scoring metrics can be changed but by default these are not configurable within the Drata risk modules. If you do choose to make a change to these metrics, you would also need to make sure to update the Drata generated risk assessment reports as well.]

Risk Rating Criteria:

Risk Value

Risk Score

Low

Less than or equal to 4.0

Medium

Greater than 4.0 but less than or equal to 9.0

High

Greater than 9.0 but less than or equal to 16.0

Critical

Greater than 16.0

Risk Score Matrix:

Risk Score Matrix

IMPACT

INCIDENTAL

(1.0)

MINOR

(2.0)

MODERATE

(3.0)

MAJOR

(4.0)

EXTREME

(5.0)

LIKELIHOOD

CERTAIN

(5.0)

MEDIUM

5.0 x 1.0 = 5.0

HIGH

5.0 x 2.0 = 10.0

HIGH

5.0 x 3.0 = 15.0

CRITICAL

5.0 x 4.0 = 20.0

CRITICAL

5.0 x 5.0 = 25.0

LIKELY

(4.0)

LOW

4.0 x 1.0 = 4.0

MEDIUM

4.0 x 2.0 = 8.0

HIGH

4.0 x 3.0 = 12.0

HIGH

4.0 x 4.0 = 16.0

CRITICAL

4.0 x 5.0 = 20.0

POSSIBLE

(3.0)

LOW

3.0 x 1.0 = 3.0

MEDIUM

3.0 x 2.0 = 6.0

MEDIUM

3.0 x 3.0 = 9.0

HIGH

3.0 x 4.0 = 12.0

HIGH

3.0 x 5.0 = 15.0

UNLIKELY

(2.0)

LOW

2.0 x 1.0 = 2.0

LOW

2.0 x 2.0 = 4.0

MEDIUM

2.0 x 3.0 = 6.0

MEDIUM

2.0 x 4.0 = 8.0

HIGH

2.0 x 5.0 = 10.0

RARE

(1.0)

LOW

1.0 x 1.0 = 1.0

LOW

1.0 x 2.0 = 2.0

LOW

1.0 x 3.0 = 3.0

LOW

1.0 x 4.0 = 4.0

MEDIUM

1.0 x 5.0 = 5.0

Risk Remediation and Treatment

  • As part of this risk remediation process, the Company shall determine objectives for mitigating or treating risks. All high and critical risks must be treated. For continuous improvement purposes, company managers may also opt to treat medium and/or low risks for company assets.

  • Treatment options for risks include the following options:

    • Selection or development of security control(s).

    • Transferring the risks to a third party; for example, by purchasing an insurance policy or signing a contract with suppliers or partners.

    • Avoiding the risk by discontinuing the business activity that causes such risk.

    • Accepting the risk; this option is permitted only if the selection of other risk treatment options would cost more than the potential impact of the risk being realized.

  • After selecting a treatment option, the risk owner should estimate the new impact and likelihood values after the planned controls are implemented.

[For more guidance on Risk Remediation and Treatment , please see here: https://help.drata.com/en/articles/6116040-risk-assessment-results-and-treatment-plan]

Risk Tolerance

[The ‘Risk Tolerance’ section is required for NIST CSF and is optional for all other frameworks.]

[COMPANY NAME] will define the level of risk it will tolerate, in relation to its specific security and privacy objectives. The criticality of a risk will determine the level of tolerance and the person responsible for accepting a non-mitigated risk. [COMPANY NAME] will:

  • Tolerate <TYPE/RISK SCORE/CRITICALITY OF RISK>.

  • Not tolerate <TYPE/RISK SCORE/CRITICALITY OF RISK>.

    [It is common to tolerate low risk and/or medium risk items. Conversely, it is common to not tolerate high and critical risk items and require remediation for those items.]

Regular Reviews of Risk Assessment and Risk Treatment

The Risk Assessment Report must be updated when newly identified risks are identified. At a minimum, this update and review shall be conducted once per year.

[The risk assessment review and subsequent risk treatment plan must be conducted at least annually.]

Reporting

The results of risk assessments, and all subsequent reviews, shall be documented in a Risk Assessment Report.

APPENDIX A

[Appendix A is required for ISO 27001, NIST CSF, NIST 800-53, and NIST 800-171. It is optional for all other frameworks.]

Threat Assessment Plan

[COMPANY NAME] collects and analyzes information about existing or potential threats to prevent harm to the organization through informed actions.

[COMPANY NAME]’s Threat assessment activities include Identifying, collecting, processing, and analyzing threat-related information. And, appropriately communicating and sharing the assessment with relevant entities. The threat assessment will be implemented in the company’s risk management process, and used for additional inputs for putting safeguards in place.

[COMPANY NAME] will follow the following plan to conduct a threat assessment:

<THREAT ASSESSMENT PLAN>

[Please see here for an example Threat Assessment Plan: https://help.drata.com/en/articles/6915781-example-threat-assessment-plan]

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