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What Is Data Risk Management?

The convergence of cloud innovation and remote work has made data more accessible than ever — not just to your employees, but to third parties and malicious actors as well. Check Point Research (CPR) found cloud-based cyber attacks increased 48% in 2022, as hackers explore newly created vulnerabilities in many organizations’ systems. 

Given this changing environment, how do you adapt to keep your data safe? Data risk management can help you oversee data flow within your company and set policies and procedures for how data is consumed and shared. 

In this blog, we’ll explore what data risk management is, the types of data risks it can address, and we’ll share best practices for actively managing data risk in your organization.

What is data risk management?

Data risk management is a series of processes designed to recognize and mitigate risks to a company’s information assets. Without data risk management, a company risks loss of reputation, data loss or corruption, intellectual property theft and data manipulation, all of which can have serious ramifications for a brand’s competitive standing and security. 

A comprehensive data risk management plan outlines steps for appropriately storing, accessing and transforming datasets, methods to proactively identify and address vulnerabilities and ways to reduce exposure when data is compromised. Data risk management also involves extensive employee training to ensure that everyone in an organization knows how to prevent a data breach.

A security person is managing sensitive data on their computer

Why is data risk management important?

When your data is left unprotected, companies risk potential revenue loss as well as the trust of your customers. Examples of typical corporate data that needs to be secured include customer lists, product roadmaps, etc. Exposed or corrupted data can impact your organization in other areas as well including reputation, competitiveness and employee privacy. Data risk management is key to a modern organization’s information security program because it:

  1. Creates a holistic view of a company’s existing data. Having a birds-eye view into your organization’s data can lead to more accurate compliance reporting and highlight opportunities to craft a more holistic data risk management strategy.

  1. Assists in identifying and prioritizing risks. Every organization encounters potential vulnerabilities, from data loss with departing employees to intellectual property theft and accidentally sharing files publicly. A data risk management plan helps companies pinpoint what risks require immediate attention and close these gaps early and often.

  1. Prevents data breaches and data loss. Data breaches are cyber security incidents in which an individual deliberately or accidentally leaks an organization’s sensitive information. Instituting strict data management policies and using data protection tools can decrease the likelihood of a data leak incident and prepare the organizations’ responses to it. According to IBM’s 2022 data breach report, 83% of businesses experience one or more data breaches. And breaches don’t come cheap — the average cost of a data breach in the US is $9.44 million. A solid data risk management approach can lower the chances of a data breach. 
  2. Helps with implementing strategies to mitigate risks. These strategies include keeping a close eye on all data movement in your system, creating data sharing policies and effectively communicating them to your employees. You can also incorporate data loss prevention technologies, such as cloud access security brokers (CASBs) and Insider Risk Management software.

To achieve the benefits of data risk management and design a robust plan, IT and security professionals must first understand what risks they’re up against.

Types of data risks

Data risks can manifest in several ways. Below, we describe six common points of failure in data management so that your team can develop policies and procedures that boost data loss prevention.

1. Data breaches

Data breaches occur when your data is intentionally or unintentionally shared with the public or third parties. As you can imagine, breaches can be harmful — particularly if sensitive information like product roadmaps, confidential employee data or customer PII is leaked.

2. Data corruption

Data breaches, power outages, software malfunctions and human error can all cause data corruption. Having inaccurate or incomplete data creates a nightmare for reporting and can vastly disrupt company operations.

3. Insider Threats

Remote work has brought with it an increased risk of insider threats — risks introduced by someone with legitimate access to a company’s systems and data.  According to Code42’s 2022 Data Exposure Report, 71% of business leaders lack visibility into sensitive data stored on local machines and personal hard drives and 55% of those surveyed have concerns about lax data security practices among hybrid workers. 

You might think employees are the principal risk, but they aren’t the only ones who can view and edit company data. Vendors, partners and consultants also leverage an organization’s data, increasing threats to data security.

4. Cloud-based applications

According to Virtru, organizations use an average of 78 different cloud-based apps in their operations. And while cloud-based platforms improve collaboration and productivity, each of these tools can also expose companies to risks. SaaS companies themselves may experience a breach, or they could make it extremely difficult to transfer data if you’re switching vendors.  

Many organizations use a cloud access security broker (CASB)  to enforce security policies when users attempt to access and move cloud-based resources. However, leveraging a CASB as a standalone tool is not the most comprehensive approach to mitigating data risk today with cloud-based apps. Companies should consider other solutions such as Insider Risk Management (IRM), which addresses the core use cases of CASB and offers similar benefits.

5. Technology challenges

Technology is always changing, making software and hardware outdated or even obsolete at a much faster rate. Data loss can happen when devices fail, or when devices that are no longer supported lack security features, which makes them more susceptible to cyberattacks. Installing the latest upgrades and continuously assessing your hardware can help protect your entire data infrastructure and avoid data breaches and loss.

Tech tools such as Salesforce and Git present high-risk methods of data exfiltration for which many organizations don’t yet have the proper data governance for. This is where tools like Code42’s Incydr become instrumental. Incydr monitors and manages data movement on endpoints and cloud-based applications to highlight critical activity, while providing a wide range of response controls to ensure organizations can act with certainty.  

Data risk management best practices

Today’s organizations face risk from myriad directions. But following these data risk management best practices can help reduce your exposure. 

Define the scope of risk analysis based on infrastructure and technology

It’s hard to know how much risk you’re facing if you don’t have the full picture of your tech stack. Conduct an exhaustive data center risk assessment to identify gaps in your monitoring procedures, technology, training needs and ways to bolster your governance policies.

Identify and define threats and risks

Once you understand the size and scope of the data you need to protect, it’s time to identify your most pressing risks. Knowing what data must be protected and to what extent can help you define permissions, set storage guidelines and address vulnerabilities in your data architecture.

Assess the likelihood of occurrence and impact of risks

Identifying potential risks is good, but knowing how likely they are to happen is better. With that in mind, IT and security teams should create a strategy to focus on the most urgent risks. 

Evaluate the quality of existing controls

You probably already have data risk management rules in place, but they may be antiquated or inadequate. Taking time to assess the controls you currently have and evaluating the results of your risk assessment can inspire you to generate new and improved policies.

Determine the appropriate response to data risk incidents

Every organization should have a plan in place to recover lost or corrupted data, to respond in the event of a breach. In your overall data risk assessment, you might uncover some vulnerabilities. Use this as an opportunity to evaluate any gaps and determine what the next best courses of action would look like. Once you’ve developed a plan, segment your treatment strategy based on the risks that will impact you the most and then test and implement it on those identified risks.

Provide ongoing monitoring and feedback

Data risk management is a 24/7/365 activity. Insider and outsider threats are always evolving. Creating a sustainable feedback loop that incorporates lessons learned from every incident will help you develop a more powerful data risk management practice over time.

Address the opportunities identified

Testing your response strategy on real risks can highlight areas where your approach is lacking before incidents occur. After you’ve responded to existing risks, ask yourself how your response plan went. Was your response successful? Add or adjust risk mitigation policies as needed.

Educate to diminish repeated action and leaks

Training and communication to all employees is essential to stop risky behavior before it becomes a pattern. Explaining the impact of data risks and sharing ways to prevent them can motivate your employees and third-party partners to stay vigilant. 

Build a safer data environment with Code42 Incydr

The rise of cloud-based applications and remote work has made the modern workplace vulnerable to new data risks that present devastating reputational and financial implications. But strong data risk management practices can counterbalance these dangers, enabling companies to foster a safer, more productive environment. The key is finding a data protection solution you can trust.

Code42 is an expert in data protection, helping enterprise and mid-market clients safeguard ideas and protect innovation, all without impeding collaboration. Code42’s Incydr solution allows security teams to understand data exposure across their organization. And with its automatic prioritization capabilities, security teams can address the riskiest activity — and fast.

Incydr doesn’t just benefit security teams, either. It helps employees and partners work effectively and securely, without affecting teams’ productivity.

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