Though digital transformation is necessary, it's accompanied by some serious risks. This is the scaling conundrum - organizations must embrace digitization to remain relevant, however, the greater the digital transformation, the greater the associated digital risks.

Thankfully, with the correct digital risk management, organizations can continue to safely embrace digital transformation while mitigating the byproduct of digital risks.

What is Digital Risk?

Digital risk refers to all of the undesired consequences that arise when adopting new technologies. These risks prevent the achievement of business objectives.

Though these consequences are undesired, when managed correctly, they should never be unexpected.

Types of Digital Risk

There are 9 types of digital risk that impeded three primary categories of business objectives.

types of digital risk

Business Objective: New Operational Efficiencies

Associated digital risks:

  • Cyberattacks

Digital transformation expands the attack surface, creating more data breach opportunities.

  • Data leaks

Accidental exposures of sensitive data that could develop into data breaches.

  • Cloud transformation

Risk arising from the deployment of new solutions or changes in architectures.

  • Workforce talent

Risks related to talent deficit

Business Objective: New Business models

Associated digital risks:

  • Third-party risks

Vulnerabilities introduced through third-party vendors that could result in supply chain attacks.

  • Compliance risks

Poor security practices that prevent regulatory compliance. This could either occur internally or throughout the third-party network.

  • Process automation risks

Risk related to the impact of automation on processes.

Business Objective: Improved Customer Service

  • Data privacy risk

RIsk related to the exposure of private customer data. May also include data leaks associated with social media accounts.

  • Business resiliency risk

Risk to service availability after a disruption such as a data breach.

What is Digital Risk Management?

Digital risk management focuses on mitigating digital risks so that digital transformation can continue without harm.

Effective digital risk protection involves predicting all possible digital risks associated with new technology so that mitigative efforts can be primed before that technology is onboarded. Established organizations with a comprehensive attack service can now scale their protection with a Digital Risk Protection Service (DRPS).

For existing technology, digital risk management is a continuous effort of protecting exposed assets from external threats.

How to Manage Digital Risk in 2024

Equally managing all 9 categories of risk is not an efficient distribution of effort because not all risks have the same level of impact on business objectives. A more efficient approach is to focus on the most critical risks threatening the health of your organization.

Cyberattack risk, data leaks, and third-party risks should be a top priority, not only because their exploitation results in the most devastating consequences, but also because they influence all other categories of digital risk.

The following digital management framework presents an efficient distribution of effort with a chief focus on these top digital risk priorities.

1. Identify All Exposed Assets

Before digital risks can be managed, all vulnerable assets should be identified. This could be done by creating a digital footprint. Critical assets include both digital solutions and stakeholders.

Examples of digital solutions are:

  • IT systems
  • Databases
  • ERP applications
  • SaaS products
  • All endpoints

Stakeholders include all users with access to your IT infrastructures such as employers, contractors, and customers.

Stakeholders are particularly vulnerable because they're soften tricked into becoming gateways to threat injections through email phishing campaigns. This can be mitigated through education.

Each of the following common attack methods links to a post that can be used to educate staff on how to identify when a cyberattack is taking place.

After all exposed assets are identified, the details of their vulnerabilities can be investigated to predict potential exploitation attempts.

Refer to the existing threat methodologies to learn which vulnerabilities are likely to be exploited. Here are some examples:

  • CVSS
  • Attack Trees
  • Persona Non-Grata
  • Security Cards
  • hTMM
  • Quantitative Threat Modelling
  • Trike
  • VAST Modelling

To save time, all asset vulnerabilities can be immediately identified with an attack surface monitoring solution.

2. Create an Incident Response Plan (IRP)

Effective digital management does not prevent cyber threats, instead, it empowers organizations to maintain control when threats are encountered.

Breach preparedness can be achieved with a clear Incident Response Plan (IRP).

An IRP is a handbook that delineates the specific responses for each cyber threat scenario. The list of potential cyberattacks created in the previous step will help you draft an outline of your IRP.

If you're unfamiliar with cyberattack strategies learn the MITRE ATT&CK framework to achieve a foundational understanding of the different stages of a cyberattack. This will help you establish the right indicators at each attack stage.

Learn more about how to create an Incident Response Plan.

3. Reduce Your Attack Surface

Though the expansion of the attack surface is an inexorable consequence of digital transformation, the goal should be to keep this expansion at an absolute minimum.

To identify attack surface reduction opportunities, you must compile a detailed list of all asset vulnerabilities in your ecosystem.

The vulnerability list created in step one outlines all obvious security caveats. In addition to this, a deeper analysis is required through risk assessments.

Perform risk assessments for both your internal infrastructures and your external vendor network.

Almost 60% of all data breaches occur through third parties, so be sure to use an extra-fine filter when reviewing the vendor attack surface.

The fewer options an attacker has, the less likely a data breach will occur.

Learn how to select a third-party risk framework for risk assessments.

Here are some other methods of reducing your attack surface:

4. Monitor All Network Access

Monitor all network traffic and create strict access policies for all sensitive assets.

Principle of Least Privilege (POLP) will limit network access to those that absolutely require it. These policies should be protected by securing Privileged Access Management (PAM).

Digital risk management isn't just the process of reacting to cyber threats when they occur, it should be a proactive effort of detecting exploitation attempts so they don't have a chance of occurring

Honeytokens deployed on all access points will alert you of any reconnaissance campaigns before they have a chance to develop into breaches. Armed with this intelligence, bespoke defenses can be designed for each unique breach attempt.

5. Continuously Monitor Your Attack Surface

WIth all exposed assets and their particular vulnerabilities mapped out, a threat detection solution should be implemented with a specific focus on social media channels.

Cyberattacks targeting social media channels are growing in prevalence. This is because their adoption is necessary for digital transformation and threat actors know that legacy cyber defense frameworks are unable to effectively protect them.

UpGuard is capable of monitoring both the internal and vendor network for vulnerabilities to provide a real-time evaluation of your entire security posture.

But to manage digital risk associated with data breaches, an additional threat detection methodology is needed - data leak detection.

A data leak is any unintentional exposure of sensitive data. If data leaks are discovered by cybercriminals, they could be used as ammunition for a devastating data breach.

Data leak detection solutions detect all data leak instances, both in the surface web and dark web, so that they can be remediated before they develop into data breaches. This is imperative for digital risk management because data leaks on the dark web could expose social media channel vulnerabilities.

Because digital risks are a novel addition to the threat landscape, their development is difficult to predict. To multiply the chances of effective management, multiple threat detection systems should be deployed in parallel.

By deploying a data leak detection engine in parallel with an attack surface monitoring solution, exposed assets will be protected with the most comprehensive level of threat monitoring.

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