Back in 2023, a major corporation suffered a massive data breach, which led to the loss of major customer trust. This breach happened because the company overlooked key vulnerabilities in its cloud setup.
Such incidents serve as an important reminder of the importance of robust cloud risk management. According to the Thales Cloud Security 2024 Report, 47% of cloud data is sensitive, yet only 10% of enterprises have encrypted 80% or more of their cloud data.
Why is it alarming? Without a proper strategy, sensitive data is open to being exposed, leading to data breaches, fines, and eventually, loss of customer trust. Organizations should have a framework to address their security vulnerabilities actively.
The gap between the requirement of security needs and action is evident, and companies must act now to avoid becoming the next cautionary tale and an example for other companies.
This blog helps you understand the shared responsibility model between your organization and cloud service providers, helping you to take control of your data and application security.
Let’s learn more about cloud risk management.
Cloud Risk Management Essentials
- Neglecting it can lead to data breaches, fines, and reputational damage.
- Understand the shared responsibility model between your obligations and your cloud providers.
- Encrypt data, use strong access controls, and regularly patch vulnerabilities.
- Keep up with the latest security trends and best practices.
- Ensure sensitive data is handled securely throughout its lifecycle.
Understanding Cloud Risk Management
Having an effective cloud risk management framework means that you have a proactive way to protect digital assets — spotting, evaluating, and handling possible threats to your data and systems in the cloud.
Companies can make smart choices, avoid problems, and keep customers happy by understanding possible risks. So, cloud computing risk management acts as your company’s safety net in the online world.
Companies that fail to implement effective risk management strategies can incur significant financial losses. For instance, data breaches can lead to substantial expenses related to problem resolution, legal fees, and reputation repair. In 2023, the average cost of a data breach was $4.45 million, highlighting the considerable financial risk involved.
By managing cloud risks, businesses can ensure that they stay within legal regulations set for the industries and avoid the costly downtime associated with security breaches. But it’s not just about security—effective cloud security risk management can help streamline routine business operations.
By understanding and analyzing all possible potential risks, companies can automate tasks, optimize workflows, and focus on other goals and tasks without worrying about any unknown disruptions.
This can also help build trust with customers, as a secure environment demonstrates responsibility towards protecting their data.
Why is it important to focus on Cloud Risk Management?
- It prevents any costly disruptions by protecting against cyberattacks and downtime that the company may be vulnerable to.
- It ensures the safety of sensitive customer data, which helps build customer trust and loyalty, which is crucial for running a business.
- It helps streamline business operations, allowing teams to focus on core activities and work toward organizational goals.
- It helps meet regulatory compliance set for the industries, which in return avoids penalties and lawsuits.
- This can help future-proof businesses adapt to evolving digital threats and the loss of valuable digital data.
5 Key Reasons Cloud Risk Management Is Essential Across Industries
1. Finance: Helps in Preventing Costly Data Breaches
In the finance sector, where sensitive information like banking details and personal data is stored in the cloud, the risk of data breaches is higher due to the presence of different details like bank account numbers and card details.
According to IBM’s 2023 report, the average cost of a data breach in finance reached $5.9 million. Strong risk management in the cloud lowers this risk by ensuring encryption, access control, and compliance with industry standards, such as PCI-DSS.
Before: Financial institutions have faced major severe legal and financial repercussions after data breaches as the institutions are responsible in case of loss of sensitive data.
After: By better managing risk and securing the cloud, institutions reduced system downtime, which helped rebuild customer trust.
2. Healthcare: Protection of Patient Data
The healthcare industry records vast amounts of personal health information (PHI) and handles them with proper care, but a data breach can lead to HIPAA violations, which result in heavy fines, as a PHI leak can lead to major compliance fines.
For 14 years in a row, the healthcare sector averaged $9.77 million per breach. A proper cloud risk management strategy can help healthcare systems avoid these penalties by implementing strict data privacy controls over the records.
Before: A major breach could result in reputational damage to the healthcare system, whether private or government and any non-compliance with healthcare regulations can open a lawsuit.
After: Implementing cloud risk management helps in safeguarding patient information and ensures regulatory compliance with the set rules.
3. Retail: Helps in Securing Customer Transactions
The retail sector, especially e-commerce websites and ghost stores, is at risk from distributed denial-of-service (DDoS) attacks and card-not-present (CNP) fraud.
According to a Zayo Report, in 2023, an average DDoS Attack lasted up to 68 minutes, with unprotected organizations shelling out an average of $6000 per minute of each attack, for a total cost of $408,000. By adopting robust cloud security measures, companies can avoid costly disruptions, keep transactions running smoothly, and be in legal compliance.
Before: Retailers have dealt with service outages and massive losses due to attacks on online and e-commerce stores.
After: Implementing risk management reduced downtime and enabled seamless transactions and proper payment gateway methods.
4. Manufacturing: Safeguarding Intellectual Property
Manufacturers store high levels of proprietary product designs and supply chain data, which is required to understand supply patterns, in online clouds.
Without proper risk management, the manufacturing plants are susceptible to intellectual property theft of different designs.
Studies show that cyberattacks on manufacturing increased by 15% between 2022 and 2023. A solid cloud security strategy can protect these valuable assets and keep production on schedule.
Before: Intellectual property theft has resulted in financial loss to the company and delayed production, which has damaged customers’ trust.
After: Cloud risk management ensures data protection and minimizes downtime for the manufacturing circles.
Cloud risk management is tailored to industry-specific challenges. This not only safeguards sensitive data but also minimizes downtime. It helps enhance customer trust and ensures compliance with regulatory standards so that lawsuits don’t open up.
By taking a proactive approach, businesses across sectors can secure their digital infrastructure and major assets that can improve performance.
How to Perform Cloud Risk Security Assessment?
Cloud risk security assessment looks at a cloud environment step-by-step to find possible weak points and threats.
The process for evaluating cloud security risks looks a lot like how we check for cyber threats. Here’s a quick rundown of the main steps you should take:
1. Defining the Assessment Scope
Clearly outlining which cloud services, applications, and data will be evaluated to focus resources effectively.
2. Inventory Cloud Resources
List out all the cloud infrastructure, software, data, and users for comprehensive risk evaluation of the data.
3. Identifying and Categorizing Assets
Group assets are based on their sensitivity, and it is important to prioritize risk mitigation efforts.
4. Threat Identification
Identify both internal and external threats, including cyberattacks and human errors.
5. Vulnerability Assessment
Scan for weaknesses using automated tools, such as cloud security scanners.
6. IAM and Preventive Controls
Implement Identity and Access Management (IAM) to enforce access control and limit exposure to vulnerabilities.
7. Continuous Monitoring
Set up ongoing monitoring to detect new threats and update risk mitigation strategies regularly.
CNAPP Market Guide
Get key insights on the state of the CNAPP market in this Gartner Market Guide for Cloud-Native Application Protection Platforms.
Read GuideKey Benefits of Cloud Security Risk Assessment
Here are some advantages to carrying out a cloud security risk assessment:
- Compliance adherence: A risk assessment can help organizations identify gaps in their security controls. It helps implement necessary measures to meet the required compliance standards to avoid any hefty penalties or damage to their reputation.
- Cost reduction: By identifying potential security threats and implementing appropriate measures, organizations can avoid costly security breaches, non-compliance errors, and legal expenses. According to IBM Cost of Data Breach 2024, AI and automation proved to be game-changers for organizations that have implemented it, showing a massive reduction in breach costs and saving an average of USD 2.22 million compared to those that didn’t.
- Data protection: Cloud assessments focus on keeping sensitive data safe by identifying potential data access points and implementing robust security protocols such as secure access controls, encryption, continuous monitoring, compliance, and incident response.
- Business continuity: Spotting potential threats can help companies create effective plans to respond to incidents. These plans help ensure that businesses can keep working if a security breach occurs, which cuts down on downtime and financial losses.
- Risk prioritization: Not all risks are the same, and the assessment helps companies rank threats based on how much they could hurt and how often they might happen. This helps companies use their resources well to deal with the most important risks.
- Enhanced reputation: It all boils down to this – when companies follow robust security practices, they earn trust and a good name among their customers and partners. Doing a thorough risk check shows they’re staying ahead of security issues.
Cloud security risk assessments can help organizations make informed decisions to protect their valuable assets and build a resilient cloud environment.
Challenges in Enterprise Cloud Risk Management
Enterprise cloud risk management faces several challenges that can complicate the effective safeguarding of sensitive data and resources. Here are some key challenges, supported by relevant statistics:
1. Complexity of Multi-Cloud Environments
Companies often use multiple cloud providers and hybrid setups, which can make managing settings and security measures trickier.
Research shows that 51% of IT professionals find it much harder to handle privacy and data protection rules in a multi-cloud/hybrid setup than on-site.
Additionally, a survey by McAfee indicates that 80% of enterprises struggle with inconsistent security policies across different cloud platforms, which further exacerbates the complexity and causes confusion for the company.
Companies often use multiple cloud providers and hybrid setups, which makes managing settings and security measures trickier. Research shows that 51% of IT pros think it’s harder to handle privacy and data protection rules in a multi-cloud/hybrid setup than on-site.
2. Increased Third-Party Risks
When businesses depend on external vendors for cloud services, they face a greater chance of data leaks and rule-breaking, which can lead to major lawsuits.
Almost 60% of companies say third-party risks worry them a lot, as these vendors might not follow the same security standards. For example, third-party risks can include:
- Data Breaches: Vendors handling sensitive data might experience breaches that expose sensitive client information.
- Compliance Issues: Third parties may fail to comply with regulations like GDPR or HIPAA, which can lead to legal and financial repercussions.
- Inconsistent Security Practices: Vendors might use outdated or insufficient security measures, increasing vulnerability.
- Operational Disruptions: Service interruptions or downtime from third parties can impact business operations and data availability.
These issues underscore why companies are deeply concerned about third-party risks, highlighting the need for rigorous vendor management and security assessments.
3. Insider threats
Insider threats, whether deliberate or accidental, are a major concern and often come as an unexpected surprise.
A study found that insiders are responsible for 34% of data breaches, revealing a major reality that these threats are less predictable and very hard to anticipate.
Unlike external threats, which are easier to identify and the company can defend against those, insider threats arise from individuals who already have access to the sensitive data.
This unpredictability highlights the critical need for strong access controls and continuous monitoring systems. Organizations can better manage and mitigate these often-overlooked threats by anticipating potential internal risks and implementing robust security measures.
4. Regulatory Compliance Challenges
Organizations are facing major challenges in ensuring compliance with multiple regulations such as GDPR, HIPAA, and PCI-DSS.
For instance, severe GDPR violations can lead to significant fines, such as up to 4% of annual global turnover, and can severely damage customer trust and business reputation, which can decrease sales, plummeting stock prices, and cause major financial losses.
Effective risk management is crucial for avoiding financial penalties, maintaining customer confidence, and protecting the organization’s brand integrity.
5. Lack of visibility and control
Many organizations struggle with a lack of visibility into their cloud environments, which hampers their ability to assess risks accurately. A survey indicated that only 46% don’t have full visibility into the connectivity of their organization’s cloud services, increasing the likelihood of unauthorized connections.
CNAPP Buyer’s Guide
Learn everything you need to know about finding the right Cloud-Native Application Protection Platform for your organization.
Read GuideWrapping Up: Embracing Proactive Cloud Security
Cloud security isn’t just about playing defense anymore. It’s about smart risk management that lets you innovate without losing sleep over threats.
The key? Get visibility into your entire cloud setup, automate your security responses, and stay on top of compliance. Tools like SentinelOne can help you do all that without drowning in complexity.
Bottom line: Treat cloud security as a business booster, not a roadblock. With the right approach, you’ll not only protect your assets but also set your company up for some serious cloud-powered growth.
Think it’s time to upgrade your cloud defenses? SentinelOne might be just what you’re looking for. Request a demo now!
FAQs
Cloud risk management identifies, assesses, and mitigates potential threats to data and systems stored in the cloud. It ensures that the business is running smoothly and offers significant data protection.
Risk modeling in the cloud is a subset of cloud risk management practices, which focuses on identifying and predicting risks specific to the cloud. In contrast, cloud risk management refers to the entire gamut of practices involved in assessing, managing, and mitigating vulnerabilities in the cloud.
A cloud risk assessment involves identifying cloud assets, evaluating threats and vulnerabilities, calculating risk levels, and developing mitigation strategies. It is a systematic approach to understanding your cloud security posture.
Cloud risk mitigation includes implementing encryption, access controls, and network security. Regular security assessments, employee training, and threat updates are also crucial.
Data breaches, unauthorized access, and denial-of-service (DoS) attacks are the three primary cloud security threats. These can lead to data loss, financial loss, and reputational damage.
SentinelOne is a leading cloud security platform and risk management software that provides comprehensive protection. It offers real-time threat detection, automated response, and continuous monitoring to safeguard your cloud environment.