In ISO 27001, understanding the inherent consequences of a risk is pivotal in the process of managing information security risks. The consequences, or impact, describe the potential damage or effect on the organisation should the risk materialise.
In ISO 27001, while the standard dictates that you must assess the consequences and likelihood to determine the level of risk, it gives organisations the flexibility to choose their most suitable method for this assessment. This article explains how to effectively determine the inherent consequences of a risk within the framework of ISO 27001.
Importance of Consequence Assessment in Risk Management
Before diving into the methodologies, it’s crucial to understand why consequence assessment is vital in risk management:
Impact Understanding: Knowing the potential consequences helps in prioritising risks based on the severity of impact.
Resource Allocation: It informs decision-making on where to allocate resources and efforts in risk mitigation.
Compliance and Continuity: Proper assessment ensures compliance with legal and regulatory requirements and supports business continuity planning.
Steps to Determine Inherent Consequences
1. Define the Impact Categories
First, clearly define what each category—Low, Medium, High, Extreme—means for different impact areas within the organisation. These areas typically include:
Financial: Costs incurred from loss or damage, including potential fines for non-compliance.
Operational: Disruption to business operations and processes.
Reputational: Damage to the organisation's public image and stakeholder trust.
Legal and Regulatory: Legal penalties or challenges, including breaches of contractual obligations.
Health and Safety: Effects on physical safety or health of employees or the public.
For instance, you might define the categories as follows:
Low: Minimal impact with negligible consequences.
Medium: Moderate impact that can be managed within routine procedures.
High: Significant impact that could jeopardize business functions.
Extreme: Severe impact with potential catastrophic consequences.
2. Identify Potential Consequences
Evaluate each identified risk to determine what potential consequences could arise if the risk were to materialise. For instance, consider a data breach involving sensitive customer information:
Financial: Costs related to fines, remediation, and customer notifications.
Reputational: Loss of customer trust and potential media scrutiny.
Legal and Regulatory: Compliance violations and legal actions from affected parties.
3. Assess Each Consequence
For each potential consequence, assess how it aligns with the predefined impact categories:
Does the financial impact qualify as Low, Medium, High, or Extreme?
What is the extent of operational disruption?
How severe could the reputational damage be?
For example:
If a data breach might lead to regulatory fines that are significant but not crippling, the financial impact might be considered High.
If the breach disrupts service but doesn’t shut down operations, the operational impact might be Medium.
4. Aggregate the Assessments
If a single risk impacts multiple areas, determine the overall category by considering the highest level of impact among all areas. The rationale is that the highest impact drives the priority for risk management.
5. Document the Ratings
Record the consequence ratings for each risk in your Risk Register within de.iterate. You may want to include additional notes for your rationale for why each rating was assigned, based on the impact assessment.
6. Review and Update Regularly
The inherent consequences of risks can evolve as the business and external environment change. Regularly review and update the consequences ratings as part of your ongoing risk management process.
Example of Using the Scale
Here’s an example of how a risk might be assessed:
Risk: Unauthorised access to the internal network.
Potential Consequences:
Financial: Minor, as there are strong recovery measures in place (Low).
Operational: Could lead to temporary downtime (Medium).
Reputational: Significant damage if publicized (High).
Overall Consequence Rating: High, because the highest single impact is in the reputational area.