Key Components of Risk Analysis in Information Security Management

C.

A risk analysis should take into account the potential size and likelihood of a loss.

It could include comparisons with a group of companies of similar size.

It should not assume an equal degree of protection for all assets since assets may have different risk factors.

The likelihood of the loss should not receive greater emphasis than the size of the loss; a risk analysis should always address both equally.

A risk analysis is a process that involves identifying, analyzing, and evaluating potential risks to an organization's assets, operations, or reputation. The purpose of a risk analysis is to enable an organization to identify potential threats and vulnerabilities and to determine the likelihood and potential impact of those threats.

The correct answer to the question is C. A risk analysis should address the potential size and likelihood of loss. This means that the risk analysis should consider both the severity of the potential harm and the probability that it will occur. A risk analysis that only considers the potential size of the loss without considering the likelihood of the loss occurring is incomplete and may result in ineffective risk mitigation strategies. Similarly, a risk analysis that only considers the likelihood of the loss occurring without considering the potential size of the loss is also incomplete and may not adequately account for the potential impact of the risk.

Answer A is incorrect because a benchmark of similar companies may be useful in understanding the types of risks that are common in a particular industry or sector, but it is not necessary for a comprehensive risk analysis. Answer B is incorrect because assuming an equal degree of protection for all assets is unrealistic and may result in inadequate protection for high-value or high-risk assets. Answer D is incorrect because giving more weight to the likelihood versus the size of the loss may result in inadequate protection for high-impact, low-probability risks.

In summary, a comprehensive risk analysis should address both the potential size and likelihood of loss to enable an organization to develop effective risk mitigation strategies.