BlogDefence1ST FEB 2024
AuthorShayan Naveed
12 min read

What is Inherent Risk in Cybersecurity?

This is the feature image for a blog on Inherent Risk
BlogDefence1ST FEB 2024
12 min read

What is Inherent Risk in Cybersecurity?

AuthorShayan Naveed
This is the feature image for a blog on Inherent Risk

Imagine cybersecurity as an intricate puzzle, and understanding the risks involved is like finding the starting piece. We call this starting point "inherent risk." It's the basic, essential stuff that sets the stage for everything else in cybersecurity. Think of it as the first chapter in a book — it lays the groundwork for the whole story. 

In this blog, we're peeling back the layers to uncover what makes inherent risk so important and why it's crucial to ask, "What is inherent risk?" for companies to fortify their defenses against cyber attacks.  

What is inherent risk?

Inherent risk refers to the potential threats and vulnerabilities that exist in a system or process before any security measures or controls are implemented. It represents the level of risk inherent to a particular activity or situation in its natural, raw state. This is the baseline risk that organizations face before they put any safety measures in place. It's crucial to understand this inherent risk because it sets the stage for how much protection is needed.

Inherent Risk vs Residual Risk in Cybersecurity

Inherent risk is the starting point of vulnerability, while residual risk is what remains even after protective measures have been placed. Think of inherent risk as the initial challenge, where vulnerabilities exist without any safeguards, and residual risk as the ongoing adventure, acknowledging that some level of risk persists despite our best efforts to secure the system. Navigating this dynamic interplay between inherent and residual risk is key to crafting robust cybersecurity strategies.

Examples of Inherent Risk

Here are some examples of inherent risk in various cybersecurity contexts:

Unpatched Software: Operating systems and applications with outdated patches or unapplied updates create a vulnerability landscape. Attackers often exploit these gaps, potentially leading to unauthorized access, data breaches, or system compromises. It is imperative to establish robust patch management procedures to address this inherent risk systematically.

Weak Passwords: The use of easily guessable or commonly used passwords poses a significant cybersecurity threat. Weak password practices increase the likelihood of unauthorized access, potentially compromising sensitive information. Organizations should prioritize comprehensive password policies, enforce multi-factor authentication, and invest in user education to mitigate this inherent risk effectively.

Lack of Encryption: Transmitting or storing sensitive data without encryption exposes it to interception and unauthorized access. This inherent risk emphasizes the importance of implementing encryption protocols to safeguard data in transit and at rest. Robust encryption measures contribute to a secure data handling environment, reducing the potential impact of cybersecurity threats.

Phishing Attacks: Inadequate awareness and training make employees susceptible to phishing attacks, a common vector for cybercriminals. Recognizing this inherent risk involves not only technological solutions but also fostering a culture of cybersecurity awareness. Regular training sessions and simulated phishing exercises contribute to building a resilient human firewall.

Outdated Hardware: The use of outdated or unsupported hardware exposes systems to security vulnerabilities. This inherent risk underscores the need for regular hardware updates and replacements to ensure that security features are current. A proactive approach to hardware maintenance mitigates potential risks associated with aging infrastructure.

Unsecured IoT Devices: Deploying Internet of Things (IoT) devices without adequate security measures introduces vulnerabilities. Addressing this inherent risk involves implementing robust security controls for IoT devices, such as strong authentication mechanisms, encryption, and regular monitoring. Ensuring the security of the entire ecosystem is crucial in mitigating IoT-related threats.

Insufficient Access Controls: Allowing inadequate or excessive access permissions increases the risk of unauthorized access and data breaches. Managing this inherent risk requires implementing a robust access control framework, including principles of least privilege and regular access reviews. Comprehensive identity and access management (IAM) practices play a pivotal role in reducing this risk.

Inadequate Endpoint Security: Endpoints lacking sufficient security measures become vulnerable to malware and cyber threats. Addressing this inherent risk involves implementing advanced endpoint protection solutions, regular security updates, and user education. A holistic approach to endpoint security is essential for safeguarding against evolving threats.

Lack of Employee Training: Employees lacking awareness of cybersecurity best practices contribute to an increased risk of falling victim to social engineering attacks. Mitigating this inherent risk requires ongoing cybersecurity training programs that empower employees to recognize and respond to potential threats. A well-informed workforce acts as a valuable line of defense against various cyber risks.

Uncontrolled Third-Party Access: Granting third-party vendors or partners excessive access without proper oversight introduces security vulnerabilities. Addressing this inherent risk involves implementing robust third-party risk management practices, including thorough vetting, contractual agreements, and regular audits. Ensuring the security of external connections is crucial for protecting sensitive data and systems.

Why Does Inherent Risk Matter In Cybersecurity?

Inherent risk is vital in cybersecurity as it provides a foundational understanding of natural vulnerabilities and threats. It guides effective risk prioritization, strategic planning, and resource allocation, enabling proactive security measures. By addressing inherent risks, organizations enhance incident preparedness, ensure business continuity, comply with regulations, build trust, and continually improve their cybersecurity posture against evolving threats. Here are some more detailed reasons:

Baseline Understanding: Inherent risk provides a baseline understanding of the natural vulnerabilities and threats that exist within a system or process before any security measures are implemented. This foundational knowledge is essential for building effective cybersecurity strategies.

Risk Prioritization: By recognizing inherent risks, cybersecurity professionals can identify critical areas that need attention and prioritize their efforts. This ensures that resources are allocated to the most vulnerable aspects of a system or process.

Strategic Planning: Understanding inherent risk allows organizations to take a proactive stance in their cybersecurity approach. Rather than reacting to incidents, they can strategically plan and implement measures to address potential vulnerabilities before they are exploited.

Resource Allocation: Inherent risk assessments help in optimizing the allocation of resources. By focusing on areas with the highest inherent risk, organizations can allocate budget, manpower, and technological solutions more efficiently.

Effective Risk Management: Inherent risk is the starting point for developing risk management strategies. It helps organizations implement controls, safeguards, and policies to mitigate the identified risks, reducing the likelihood and impact of potential cybersecurity incidents.

Regulatory Compliance: Many regulatory frameworks and cybersecurity standards require organizations to assess and manage inherent risks. Understanding and addressing inherent risk is often a prerequisite for compliance with these standards, ensuring that organizations meet legal and industry-specific requirements.

Incident Preparedness: Recognizing inherent risk enhances an organization's ability to detect and respond to potential incidents early on. This proactive approach minimizes the window of vulnerability, reducing the potential impact of cyber threats.

Business Continuity: Inherent risk assessments contribute to ensuring business continuity by safeguarding critical systems and data. By addressing vulnerabilities at their core, organizations can maintain operational integrity even in the face of evolving cybersecurity threats.

Trust and Reputation: Demonstrating a commitment to understanding and mitigating inherent risks enhances trust among customers, stakeholders, and partners. A robust cybersecurity strategy that addresses inherent risks helps protect the organization's reputation.

Continuous Improvement: Inherent risk assessments are not static; they evolve with technological advancements and emerging threats. Regular evaluations help organizations adapt and improve their cybersecurity posture to stay ahead of cyber adversaries.

How to perform Cyber Risk Assessment: A Step-by-Step Guide 

Cyber Risk Assessment is a proactive strategy that allows organizations to not just understand inherent risks but also take deliberate actions to fortify their digital fortresses. Follow these actionable steps for a roadmap to evaluate, prioritize, and manage risks within your digital ecosystem:

Step 1: Define Your Assets and Scope

Begin by identifying and cataloging all digital assets within your organization. This includes hardware, software, data, personnel, and any interconnected systems. Define the scope of your assessment to ensure comprehensive coverage.

Step 2: Identify and Classify Risks

Conduct a thorough risk identification process, identifying potential threats and vulnerabilities to your assets. Classify these risks based on their potential impact and likelihood of occurrence. This step lays the groundwork for prioritization.

Step 3: Assess Potential Impact

Evaluate the potential consequences of identified risks on your organization's operations, data integrity, confidentiality, and availability. Understand the worst-case scenarios associated with each risk to determine their significance.

Step 4: Determine Likelihood of Occurrence

Assess the likelihood of each identified risk materializing. Consider historical data, industry trends, and the effectiveness of existing controls in gauging the probability of each risk event.

Step 5: Prioritize Risks

Combine the impact and likelihood assessments to prioritize risks. This step helps in focusing resources on addressing the most critical risks that could have a substantial impact on your organization.

Step 6: Evaluate Existing Controls

Examine the effectiveness of your current cybersecurity controls in mitigating the prioritized risks. Identify any gaps or weaknesses in the existing control environment that need attention.

Step 7: Develop Mitigation Strategies

Based on the prioritized risks and control evaluations, formulate mitigation strategies. These strategies may involve implementing new controls, enhancing existing ones, or developing incident response plans to minimize the impact of potential risks.

Step 8: Establish Risk Tolerance

Define the level of risk your organization is willing to accept. This involves aligning risk management decisions with business objectives and determining an acceptable level of risk exposure.

Step 9: Monitor and Review

Implement a continuous monitoring system to track changes in the threat landscape, technology, and business environment. Regularly review and update your risk assessment to ensure its relevance and effectiveness.

Step 10: Communicate and Educate

Effectively communicate the results of your risk assessment to key stakeholders within your organization. Provide ongoing education and training to employees to enhance cybersecurity awareness and foster a culture of proactive risk management.


In closing, embracing inherent risk is not a call for fear but an invitation to empowerment. It empowers organizations to strategize, allocate resources judiciously, and build a resilient defense against evolving cyber threats. While you're at it, residual risks in cybersecurity also deserve consideration.

By acknowledging and understanding inherent risks, organizations pave the way for a cybersecurity narrative that prioritizes preparedness, compliance, trust, and continuous improvement.

Shayan Naveed
Shayan Naveed / Contributor
Shayan has covered various topics as a journalist with over a decade of experience. She is currently focusing on the ramifications of cybersecurity incidents and their impact on our digital lifestyle as whole. Reach out to her for tips, pitches and stories.
FAQsFrequently Asked Questions
Inherent risk is the initial vulnerability, while residual risk persists even after security measures are implemented. It's crucial to navigate the interplay between these two to develop effective cybersecurity strategies.
Assessing the level of inherent risk involves identifying vulnerabilities and potential threats. Organizations can conduct comprehensive risk assessments, penetration testing, and vulnerability scans to quantify and understand their inherent risk landscape.
Inherent risk can vary significantly based on industry, size, and the nature of an organization's operations. Industries dealing with sensitive data, like finance or healthcare, may face different inherent risks compared to smaller organizations with less complex IT infrastructures.