Proactive Risk Management Vs Reactive [How to Implement It]
Anwita
Jul 22, 2024
In September 2017, Equifax, one of the largest credit reporting agencies, reported a data breach. Sensitive personal data of 147 million people, such as Social Security numbers, birth dates, addresses, driver’s license numbers, and credit card information, was exposed. Investigations pinpointed the incident to a failure to address a known vulnerability in their web application framework. The issue was traced to a failure to act on it proactively, either due to late flagging, lack of prioritization, or lack of ownership for the issue.
If malicious actors have the tools and capabilities to inflict damage of this magnitude on an enterprise, imagine how vulnerable small businesses are unless they have a proactive risk management program.
This article aims to help you understand what proactive risk management is, how it differs from a reactive one, why you should implement it, and how to implement it.
TL:DR
Proactive risk management involves identifying and addressing potential risks before they can cause damage. |
Proactive risk management helps to actively reduce the possibility of security breaches, comply with regulations, gain customer trust, and ensure business continuity. |
To develop a proactive risk program, develop an employee training program, develop a risk treatment plan, communicate with your stakeholders, continuously monitor, and use automation tools. |
What is proactive risk management?
Proactive risk management is the practice of detecting and addressing risks before they become incidents. It identifies patterns of anomalous behavior, conducts frequent risk assessments, analyzes incident history, evaluates risk trends, and continuously monitors a business’s IT infrastructure.
The proactive approach to risk management aims to ensure long term sustainability, reduces the costs to mitigate a data breach, and helps teams keep their operations up and running after a compromise.
Some examples of proactive risk management are employee training, implementing detective and preventive security controls, and vulnerability management.
“If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.” – Gary Cohn, Director of the U.S National Economic Council
Proactive vs reactive risk management
The key difference between reactive and proactive risk management strategies is that the reactive approach risks after they occur, trying to control impact, and the proactive approach follows a predictive strategy to mitigate risks before they occur. Let’s break this down:
Proactive risk management | Reactive risk management |
Difference 1: Time to reaction | |
Proactive management is all about mitigating risks before they occur. Security teams analyze each risk based on its threat’s magnitude and treat them using the right measures/ controls. | Reactive management deals with the impact of the risks after an incident has already occurred or is ongoing. Threat teams don’t actively hunt for high-risk vulnerabilities and implement controls/ corrective measures post-infection. |
Difference 2: Approach | |
Proactive approach is preventive in nature. It combines preventive techniques and measures like anomaly detection, zero trust security, sandboxing, and more. | Reactive approach is responsive in nature. Examples of responsive techniques and measures include containerizing, quarantining, investigating, and more. |
Difference 3: Cost considerations | |
Organizations that adopt the proactive way aim to minimize the overall loss from disasters in the long run. | Organizations adopting the reactive way prioritize cutting costs in the short term. The management may be tight on security budget or don’t have high risk assets in their system. |
Difference 4: Impact analysis | |
Incident impact is low when risks are proactively managed.Risk teams calculate the potential impact, probability of a successful incident, and estimated loss. | The impact of incidents, on average, is higher in reactive modules compared to a proactive one. |
Difference 5: Risk obligations | |
Many data security and privacy frameworks like ISO 27001, NIST RMF, NIST 800 53, HIPAA, and more require businesses to implement proactive risk management measures. | If you don’t handle sensitive customer data or process confidential government information, data security and privacy regulations may not apply – proactive risk management is optional in your case. |
Reactive to proactive: benefits of proactive risk management
Most businesses are resistant to adopting reactive approaches until disaster hits. Management and decision makers are generally reluctant to allocate a budget for risk management as it is seen as a burden. In theory, it is a good practice.
In reality, it is the door to losing customer/ stakeholder trust, operational impediments, bleeding engineering bandwidth, and most importantly, a serious toll on your bottom line.
Let’s break these down and understand how the proactive way is key to risk efficiency
Strike it down before it strikes you
A common misconception around the proactive way is having to do everything under the sun. That, however, is not the case. It is a bottom up practice that helps you significantly reduce the possibility of a disaster and its aftermath.
It empowers you to prevent these issues by giving you more control over risk posture. Proactive measures and technologies such as predictive analytics, pattern analysis tools, and advanced detection capabilities equip you with predictive powers.
This way, you know what control to implement and where to allocate resources instead of groping in the dark. Ultimately, this puts the ball in your court – and empowers you to strike down the risks before it strikes your systems.
Don’t lose prospects to security concerns
As more cases of security breaches are making headlines, data privacy and security concerns are growing. B2B prospects have a long checklist to filter out service providers – and one item keeps popping up in almost every checklist is – are you SOC 2/ ISO/ X regulation compliant?
This translates to…do you have the right controls/ measures in place to proactively secure my data against breaches? Can I trust you to process my sensitive information? What this means for your business is the need to adopt proactive measures before it becomes a sales blocker.
Avoid the headaches of reactive responses
Reactive techniques work, but only to a limited extent and in specific environments like businesses who deploy their data in on-premise systems.
As outlined earlier, reactive measures impact your bottom line harder. When you have little insight into the risk events, it leaves you scrambling for ways to patch things up and restore normalcy. Sometimes, teams are left with no option but take the blow – a situation you don’t want to find yourself in.
A research by IBM and Ponemon Institute found that proactive threat hunting is one of the key amplifiers that positively influences the cost of a data breach. It also found that organizations with proactive vulnerability management techniques experienced a lower number of breaches.
How to proactively manage risks: five best practices to know
Having helped thousands of companies proactively manage their infosec risks, we gathered our learnings to help you build a proactive risk management program:
Strengthen your first line of defense
No matter how advanced and efficient your tech stack is, the people accessing sensitive systems are accountable for their safety. Though tools and technologies play a pivotal role in preventing successful breaches, if humans interacting with these systems lack the required knowledge to use them properly, it introduces vulnerabilities.
Every individual with access to these systems – employees, third party service providers, external consultants, guest account credential holders should understand risk objectives and security compliance obligations.
Develop a training program and include it in your onboarding process for both internal and external stakeholders.
“Risk is something which is common sense and we do it every day. It is also core to frameworks like ISO. If you find a good system that helps you translate that risk into the way your business runs, then you can do well as a risk function.”
Girish Redekar, Co-Founder at Sprinto
Understand your risk environment
An end-to-end proactive risk management involves the use of a suite of tools and controls. To select the appropriate tools and controls, you should know where to focus by identifying the gaps through a risk assessment.
Proactive risk assessment means evaluating your risk posture whenever new processes, tools, and systems are introduced or changed. This is because changing a component of your workflow impacts the environment around it and change = uncertainties and uncertainties = possible risks.
Develop a remediation plan
Ideally, you should reduce all your risks to a zero. But practically, this is not a feasible solution as risk mitigation is time consuming and expensive; especially for startups and small to medium sized businesses.
The results of your risk assessment are used to determine the mitigation strategies – accept, transfer, avoid, or mitigate. You can determine this based on the score against each risk. Use a risk quantification method to score them against the probability of occurring and its impact on your business assets and operations.
Regularly report your risk management practices
Your stakeholders should be on the same page as you for critical decisions. Document, communicate, and update your risk management policies and strategies whenever you adopt a new process or change existing ones.
This helps to improve transparency across, enhance collaboration between concerned parties, and ensure no friction in the future. Involving everyone across the board is a crucial part of compliance risk reporting and management as it helps to raise awareness, include all possible angles, and facilitate informed decision making.
Continuously monitor your risk environment
To proactively mitigate risks, you must proactively identify them. To identify gaps without missing a beat, implement a system that continuously monitors your data assets, networks, code repositories, and other critical infrastructure components.
Continuous monitoring involves assessing your environment on a regular basis. This helps to identify security gaps and non-compliant activities so that no minor gaps become a risk and the risk into an event. The monitoring process should be aligned with your regulatory obligations.
Use automation to avoid risk failures
Effective proactive risk management requires evaluating risks within the business context and against common benchmarks and regulatory requirements. It is a complex process and the smallest miss can escalate into your biggest challenge.
When you manage risks manually based on intuition, it is filled with assumptions and disconnected from reality. This results in a weak risk register, poor resource allocation, and misguided decisions, ultimately defeating the purpose of proactive risk management.
GRC solutions like Sprinto interprets risks and assesses impacts, enabling you to act with precision. By connecting natively with your cloud stack, it quickly identifies misconfigurations and vulnerabilities. You can use this tool to:
- Build a comprehensive risk register and score risks using trusted industry benchmarks to avoid intuitive risk assessment.
- Use the risk library to scope out security risks across your assets and processes. Add custom risks, assign impact scores, and update as you grow to maintain an accurate risk register.
- Automatically map risks to compliance criteria, launch automated checks, and track the overall risk posture in a single dashboard.
- Trigger alerts and remediation workflows for anomalies to ensure timely resolution.
- Centralize risk scores, likelihood of impact, risk owners, controls, and treatment plans.
- Continuously and correctly consolidate risk and controls to determine the severity and treatment so you can manage risks from a single source of truth
Want to see Sprinto in action? Let our experts guide you.
Proactive risk management with sprinto
An proactive risk approach simplifies risk handling and fosters a risk-aware culture within your organization. An effective risk management program relies on two essential pillars: the right strategy and the right technology stack.
If you need assistance in implementing an IRM strategy for your team, we can automate up to 80% of the process. Sprinto places your compliance program on autopilot, enabling regular monitoring of risk controls. Schedule a demo to discover how Sprinto can help you achieve risk readiness with ease!
FAQs
What is the difference between predictive and proactive risk management?
The key difference between proactive and predictive risk management is that predictive risk management uses data and analytics to forecast potential risks, while proactive risk management involves preemptive actions to prevent risks from occurring.
What is an example of proactive risk mitigation?
An example of proactive risk management is the implementation of regular security audits to identify and address vulnerabilities is an example of proactive risk mitigation. Routine examination of risks helps you fix potential security issues before they are exploited to minimize the likelihood of cyber threats.
Can unknown risks be managed proactively?
Yes, you can manage unknown risks proactively by implementing continuous monitoring systems, fostering a risk-first, using predictive data analytics, and conducting risk assessments.