Name: Risk Assessment Methodology
Author: Hack23

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Risk Assessment Methodology | Skills Pool

flowchart TD
    START[🎯 Risk Assessment<br/>Initiation] --> IDENTIFY[📋 Risk Identification<br/>Assets • Threats • Vulnerabilities]
    
    IDENTIFY --> ANALYZE[🔍 Risk Analysis]
    
    ANALYZE --> LIKELIHOOD[📊 Likelihood Assessment<br/>Historical + Industry + Expert]
    ANALYZE --> IMPACT[💰 Impact Assessment<br/>Financial • Operational • Reputational]
    
    LIKELIHOOD --> CALC[🔢 Risk Score Calculation<br/>Probability × Impact × 100]
    IMPACT --> CALC
    
    CALC --> CATEGORY{Risk Level?}
    
    CATEGORY -->|400-600| CRITICAL[🔴 Critical Risk<br/>Immediate action required]
    CATEGORY -->|200-399| HIGH[🟠 High Risk<br/>Priority mitigation needed]
    CATEGORY -->|100-199| MEDIUM[🟡 Medium Risk<br/>Planned controls required]
    CATEGORY -->|50-99| LOW[🟢 Low Risk<br/>Monitor and accept]
    CATEGORY -->|1-49| MINIMAL[⚪ Minimal Risk<br/>Accept risk]
    
    CRITICAL --> TREAT{Treatment<br/>Decision}
    HIGH --> TREAT
    MEDIUM --> TREAT
    LOW --> ACCEPT[✅ Accept Risk<br/>Document in Risk Register]
    MINIMAL --> ACCEPT
    
    TREAT -->|Reduce| MITIGATE[🛡️ Implement Controls<br/>Reduce likelihood or impact]
    TREAT -->|Transfer| TRANSFER[🤝 Insurance/Outsource<br/>Share financial burden]
    TREAT -->|Avoid| AVOID[🚫 Eliminate Activity<br/>Remove risk source]
    TREAT -->|Accept| ACCEPT_HIGH[📋 Document Acceptance<br/>CEO approval required]
    
    MITIGATE --> RESIDUAL[📉 Residual Risk<br/>Reassessment]
    TRANSFER --> RESIDUAL
    AVOID --> RESIDUAL
    ACCEPT_HIGH --> RESIDUAL
    ACCEPT --> REGISTER[📊 Risk Register<br/>Tracking & Monitoring]
    
    RESIDUAL --> REGISTER
    
    REGISTER --> REVIEW[🔄 Periodic Review<br/>Quarterly/Annual]
    REVIEW --> START
    
    style START fill:#1565C0,stroke:#0D47A1,stroke-width:3px,color:#fff
    style CRITICAL fill:#D32F2F,stroke:#B71C1C,stroke-width:3px,color:#fff
    style HIGH fill:#FF9800,stroke:#F57C00,stroke-width:2px
    style MEDIUM fill:#FFC107,stroke:#FFA000,stroke-width:2px
    style LOW fill:#4CAF50,stroke:#2E7D32,stroke-width:2px,color:#fff
    style MINIMAL fill:#9E9E9E,stroke:#616161,stroke-width:1px
    style REGISTER fill:#9C27B0,stroke:#7B1FA2,stroke-width:2px,color:#fff

Likelihood	Probability	Annual Frequency	ARO	Definition	Examples
Almost Certain	80-99%	292-361 events/year	0.8-0.99	Expected to occur in most circumstances	Daily operational issues, routine maintenance
Likely	60-79%	219-291 events/year	0.6-0.79	Will probably occur	Weekly service disruptions, staff availability issues
Possible	40-59%	146-218 events/year	0.4-0.59	Might occur at some time	Monthly supplier issues, seasonal variations
Unlikely	20-39%	73-145 events/year	0.2-0.39	Could occur but not expected	Quarterly security incidents, annual contract changes
Rare	5-19%	18-72 events/year	0.05-0.19	May occur only in exceptional circumstances	Multi-year events, rare external factors
Exceptional	<5%	<18 events/year	<0.05	Rare, once-in-decade event	Black swan events, extreme scenarios

# Historical frequency analysis
def calculate_aro(events_last_3_years, trend_factor=1.0):
    """Calculate Annual Rate of Occurrence from historical data"""
    base_aro = sum(events_last_3_years) / 3
    adjusted_aro = base_aro * trend_factor
    return min(adjusted_aro, 0.99)  # Cap at 99%

# Example: 8 incidents in 3 years, increasing trend
aro = calculate_aro([2, 3, 3], trend_factor=1.2)  # = 0.32 (Unlikely)

Impact	Financial	Operational	Reputational	Regulatory
Catastrophic	>€50K	Complete shutdown	International media	Criminal charges
Critical	€10K-50K	Major disruption	National media	Significant fines
High	€1K-10K	Significant degradation	Industry attention	Moderate penalties
Moderate	€500-1K	Partial service impact	Regional visibility	Minor warnings
Low	€100-500	Minor inconvenience	Limited local impact	Verbal guidance
Minimal	<€100	No significant impact	No external visibility	No implications

Risk Level	Score Range	Management Response	Review Frequency
Critical	400-600	CEO immediate action, daily monitoring	Daily
High	200-399	Weekly executive review	Weekly
Medium	100-199	Monthly assessment	Monthly
Low	50-99	Quarterly monitoring	Quarterly
Minimal	1-49	Acceptance, periodic review	Annual

Category	Value Range	Examples
Mission Critical	€100K-500K	Core infrastructure, customer data
High Value	€50K-100K	Business applications, intellectual property
Standard	€10K-50K	Supporting systems, processes
Low Value	€1K-10K	Documentation, utilities

Exposure	Factor	Description
Complete Loss	0.8-1.0	Total destruction (ransomware, theft)
Major Loss	0.5-0.8	Significant damage (data corruption)
Moderate Loss	0.2-0.5	Partial damage (service disruption)
Minor Loss	0.1-0.2	Limited impact (performance degradation)

# Ransomware attack on CIA Platform
asset_value = 200000  # €200K (Mission Critical)
exposure_factor = 0.9  # 90% loss (Complete Loss)
aro = 0.7  # 70% (Likely based on industry data)

sle = asset_value * exposure_factor  # €180K
ale = sle * aro  # €126K annually

Category	VaR Range (€)	Management Action
Critical	>€200K	Board escalation, immediate mitigation
High	€50K-200K	Executive committee, quarterly review
Medium	€10K-50K	Risk committee, semi-annual review
Low	€1K-10K	Management monitoring, annual review
Minimal	<€1K	Acceptance, periodic review

graph TB
    RISK[📊 Risk Identified<br/>with Score] --> EVAL{Risk Level?}
    
    EVAL -->|Critical/High<br/>400-600, 200-399| HIGH_TREAT[🎯 Treatment Required]
    EVAL -->|Medium<br/>100-199| MED_TREAT[⚖️ Treatment Evaluation]
    EVAL -->|Low/Minimal<br/>1-99| LOW_TREAT[✅ Consider Acceptance]
    
    HIGH_TREAT --> OPTIONS1[Treatment Options]
    MED_TREAT --> OPTIONS2[Treatment Options]
    LOW_TREAT --> ACCEPT_DIRECT[Accept Risk<br/>Document in Risk Register]
    
    OPTIONS1 --> MITIGATE1[🛡️ Mitigate<br/>Implement controls]
    OPTIONS1 --> TRANSFER1[🤝 Transfer<br/>Insurance/Outsource]
    OPTIONS1 --> AVOID1[🚫 Avoid<br/>Eliminate activity]
    
    OPTIONS2 --> MITIGATE2[🛡️ Mitigate<br/>Cost-benefit analysis]
    OPTIONS2 --> ACCEPT2[📋 Accept<br/>Document rationale]
    
    MITIGATE1 --> COST_BENEFIT{Control Cost<br/>vs ALE?}
    TRANSFER1 --> COST_BENEFIT
    MITIGATE2 --> COST_BENEFIT
    
    COST_BENEFIT -->|Control < ALE| IMPLEMENT[✅ Implement Control]
    COST_BENEFIT -->|Control > ALE| ACCEPT_COST[📋 Accept Risk<br/>Document decision]
    
    AVOID1 --> BUSINESS{Business<br/>Impact?}
    BUSINESS -->|Acceptable| ELIMINATE[🚫 Eliminate Risk]
    BUSINESS -->|Unacceptable| FIND_ALT[🔄 Find Alternative]
    
    IMPLEMENT --> RESIDUAL[📉 Residual Risk<br/>Assessment]
    ACCEPT2 --> REGISTER[📊 Risk Register]
    ACCEPT_COST --> REGISTER
    ACCEPT_DIRECT --> REGISTER
    ELIMINATE --> REGISTER
    
    RESIDUAL --> REEVAL{Still<br/>High/Critical?}
    REEVAL -->|Yes| ADDITIONAL[Additional Controls<br/>Required]
    REEVAL -->|No| REGISTER
    
    ADDITIONAL --> COST_BENEFIT
    
    style RISK fill:#1565C0,stroke:#0D47A1,stroke-width:3px,color:#fff
    style HIGH_TREAT fill:#D32F2F,stroke:#B71C1C,stroke-width:3px,color:#fff
    style MED_TREAT fill:#FF9800,stroke:#F57C00,stroke-width:2px
    style IMPLEMENT fill:#4CAF50,stroke:#2E7D32,stroke-width:2px,color:#fff
    style REGISTER fill:#9C27B0,stroke:#7B1FA2,stroke-width:2px,color:#fff

def control_roi(ale_before, ale_after, control_cost_annual):
    """Calculate return on investment for security control"""
    annual_benefit = ale_before - ale_after
    net_benefit = annual_benefit - control_cost_annual
    roi_percentage = (net_benefit / control_cost_annual) * 100
    return {
        'annual_benefit': annual_benefit,
        'net_benefit': net_benefit,
        'roi_percentage': roi_percentage,
        'recommendation': 'Implement' if net_benefit > 0 else 'Reject'
    }

# Example: MFA implementation
result = control_roi(
    ale_before=126000,  # €126K ransomware risk
    ale_after=12600,    # 90% reduction
    control_cost_annual=5000  # €5K/year for MFA
)
# Result: €108.4K net benefit, 2068% ROI → Implement

# Risk Assessment: [Risk Name]

**Risk ID:** RSK-2025-XXX
**Assessment Date:** 2025-01-XX
**Assessor:** [Name/Role]
**Status:** Open/Mitigated/Accepted/Closed

## Risk Description
Brief description of the risk scenario.

## Asset Information
- **Primary Asset:** [Asset name]
- **Asset Value:** €X
- **Classification:** [Confidentiality/Integrity/Availability levels]

## Threat & Vulnerability
- **Threat Actor:** [Who/what causes the risk]
- **Threat Motivation:** [Why would they exploit this]
- **Vulnerability:** [What weakness enables exploitation]
- **Attack Vector:** [How the attack occurs]

## Likelihood Assessment
- **Category:** [Exceptional/Rare/Unlikely/Possible/Likely/Almost Certain]
- **Probability:** X%
- **ARO:** X.XX
- **Evidence:** [Historical data, industry benchmarks, expert judgment]

## Impact Assessment
- **Financial:** €X (Category: [Minimal/Low/Moderate/High/Critical/Catastrophic])
- **Operational:** [Description]
- **Reputational:** [Description]
- **Regulatory:** [Description]
- **Impact Score:** X (1-6)

## Risk Calculation
- **Risk Score:** [Probability × Impact × 100] = XXX
- **Risk Level:** 🔴/🟠/🟡/🟢/⚪ [Critical/High/Medium/Low/Minimal]

## Financial Analysis
- **Asset Value:** €X
- **Exposure Factor:** X.X
- **SLE:** €X
- **ALE:** €X

## Current Controls
- [Existing control 1]
- [Existing control 2]

## Recommended Treatment
- **Strategy:** Mitigate/Transfer/Avoid/Accept
- **Proposed Controls:** [List controls]
- **Control Cost:** €X annually
- **Residual Risk Score:** XXX → [Risk Level]
- **Cost-Benefit:** Net benefit €X, ROI X%
- **Recommendation:** Implement/Reject

## Approval
- **Risk Owner:** [Name/Role]
- **Approval Date:** 2025-XX-XX
- **Review Date:** 2025-XX-XX

Risk ID	Description	Likelihood	Impact	Score	Level	Treatment	Owner
RSK-001	Data breach	Unlikely (30%)	Critical (5)	150	🟡 Medium	MFA implementation	CTO
RSK-002	DDoS attack	Possible (50%)	High (4)	200	🟠 High	CDN + WAF	CTO
RSK-003	Ransomware	Likely (70%)	Catastrophic (6)	420	🔴 Critical	Backup + EDR	CEO

risk_id: "RSK-2025-001"
risk_name: "Ransomware attack on CIA Platform"

Risk Assessment Methodology

Risk Assessment Methodology Skill

Purpose

When to Use This Skill

Risk Assessment Methodology

Risk Assessment Methodology Skill

Purpose

When to Use This Skill

Risk Assessment Process Flow

Likelihood Assessment Framework

Likelihood Assessment Methods

Impact Assessment Framework

Impact Score Mapping

Risk Score Calculation

Calculation Examples

Risk Level Categories

Financial Risk Analysis

Single Loss Expectancy (SLE)

Annual Loss Expectancy (ALE)

Value at Risk (VaR) Framework

Risk Treatment Decision Matrix

Cost-Benefit Analysis Formula

Risk Assessment Templates

Template 1: Comprehensive Risk Assessment

Template 2: Quick Risk Matrix

Integration with Classification Framework

CIA Triad Mapping

Practical Examples

Example 1: CIA Platform Ransomware Risk

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