Cloud Risk Management: Addressing Risks in Cloud Computing

Cloud risk management is a challenge that all organizations using cloud technologies have to contend with. Today, it would be extremely difficult to find an organization that has not implemented cloud technology in some way or another. The attention has shifted to optimizing cloud resources while mitigating risks that come with cloud adoption. Cloud adoption introduces different types of risks that your organization may not face with a traditional on-prem setup. If they aren’t addressed, they introduce problems such as compliance failures, security issues, etc. This is why cloud risk management is very important; it helps you identify and manage these risks.

In this guide, we’ll cover what cloud risk management is, plus all that you need to know to manage risks in cloud computing effectively.

What is cloud risk management?

Cloud risk management is the process of identifying and addressing the risks that come with using cloud computing services. It is a continuous process involving:

Identification - Creating a complete list of your cloud assets and then identifying potential threats that could harm these assets.

Assessment - Analyzing the risks you’ve identified to determine their exploitability and the potential impact this could have on your business.

Risk mitigation - Implementing security controls and safeguards to reduce or eliminate valid risks.

Monitoring - You have to monitor your cloud environment continuously to identify risks early and ensure your security controls are working.

The purpose of cloud risk management is to enable your organization to use the cloud securely and responsibly. In other words, it allows you to enjoy the cloud’s benefits, such as flexibility, scalability, and cost savings, without exposing yourself to the risks that come with it.

We’ve emphasized that cloud risk management is about identifying and addressing cloud risks. So what are these risks that come with an organization using cloud computing services?

What are the key risks in cloud computing?

All IT setups, whether on-prem or in the cloud, face similar risks. However, there are specific cybersecurity risks that are unique (or much more pronounced) in cloud environments. They include:

Misconfigurations

These are security flaws that result from human errors when setting up and managing cloud environments. For example, a developer creates a Google Cloud Storage bucket to store customer data, backup files, etc. But they mistakenly set access permissions to all users instead of restricting access.

These types of errors are quite common, seeing as cloud services are complex and have thousands of different settings. What makes them severe is that they’re an ‘unforced error’ that creates a direct attack path for attackers.

What’s worse is that one cloud resource can be connected to numerous other services in the organization. A mistake in one cloud service can cause a ripple effect across the entire cloud environment.

Misconfigurations are the primary cause of data breaches

As mentioned earlier, misconfigurations leave open doors for attackers. In our publicly accessible Cloud Storage bucket example, an attacker can use an automated tool to search for publicly exposed cloud storage buckets across the internet. Once they find yours, they’ll be able to access it and exfiltrate data or modify it.

Something similar happened to Verizon (2017) and Capital One (2019).

Verizon data breach (2017) - Verizon’s data breach didn’t come from Verizon itself but from NICE Systems, one of its third-party partners. NICE Systems misconfigured an Amazon S3 storage bucket, leaving it publicly accessible. This resulted in the exposure of 6 million customers’ personal accounts.

Capital One’s data breach (2019) - One of Capital One’s web apps was misconfigured, leaving a vulnerability that a former AWS employee exploited. Over 100 million customer records were affected.

Although misconfigurations can happen accidentally, they can have severe consequences.

Compliance and regulatory issues

Data is subject to the laws of the country where it resides (data sovereignty). In the cloud, data belonging to customers in one country can reside in another. For instance, a US-based company that has customers in the EU region might store their data in US servers.

This raises data sovereignty conflicts since:

The company has to comply with the EU’s GDPR, which restricts cross-border personal data transfers of EU citizens' data (GDPR Chapter 5).
Let’s say the company chooses to store the data in data centers based in the EU. The U.S. CLOUD Act (2018) compels U.S.-based service providers to provide data to U.S. authorities, even if the data is stored outside the United States.

When they hand over data stored in the EU data centers, this violates GDPR, which restricts cross-border data transfers.

Lack of visibility and control

As an organization in the cloud, it is difficult for you to know every one of your cloud assets. Here’s why.

Cloud environments are highly dynamic - You can spin up, scale out, and terminate a cloud (usually a virtual machine) in seconds. An asset can exist in one moment and be gone in the next.

Shadow IT - Employees can easily sign up for cloud services on their own, which allows them to do so for unauthorized services (shadow IT). Shadow IT is outside the control and visibility of the official IT department.

This lack of visibility creates security blind spots. When you don’t know what is in your cloud environment, you can’t protect it.

Responsibility gaps in the shared responsibility model

When you move to the cloud, you share the responsibility for securing your cloud assets with your CSP. They handle securing the infrastructure, and you take care of securing your apps, data, network configurations, identity access management, etc.

Responsibility gaps arise when you and your CSP assume the other party is handling a security control. For example, if your CSP provides encryption tools and you assume encryption is automatic without enabling or configuring these tools.

This gap introduces a vulnerability where an attacker can intercept unencrypted data.

Insecure interfaces and APIs

Cloud resources rely on APIs to work. They are powerful and, if left insecure, can expose sensitive functions or data, potentially giving attackers a pathway into your applications. This makes them a major entry point for attackers.

Apart from these, there are many more risks, such as insider threats, technical failures from your CSP, access control complexities, etc. Whatever the risk is, the scale of the cloud magnifies it.

As an organization looking to enjoy the benefits of the cloud, you’ll have to manage these risks. So, let’s look at how to manage risks associated with cloud computing.

How to manage risks in cloud computing

To address challenges posed by cloud computing, you’ll need to find security risks in your cloud environment, validate them, and then implement security controls to mitigate these risks. It doesn’t stop there. You still need to keep tabs on your cloud environment and mitigate any risks that appear early.

What steps are involved in the cloud risk management process?

Risk management in cloud computing is a continuous process, usually involving 5 steps:

Identifying risks in your cloud environment

First, you’ll need to solve the problems posed by shadow IT by identifying all your cloud assets. After all, you can’t protect what you don’t know. Major cloud providers have built-in services that can help you identify all your assets. For instance:

Google Cloud’s Asset Inventory.
Azure’s Resource Graph.

Third-party tools, such as Qualys (plus others we’ll cover later), can help you identify assets if you have them spread out across multiple cloud environments.

After gathering all your cloud assets, you’ll scan them for publicly exposed storage buckets, disabled encryption, insecure APIs, and other vulnerabilities. You’ll also need to conduct a compliance gap analysis to see if you might be violating a regulation unknowingly.

Assessing and prioritizing risks

The next step involves assessing the risks identified in the first step to determine the:

Likelihood of a threat exploiting a vulnerability.
Potential negative consequences if a risk is realized. That is, what would happen if an attacker discovers a misconfigured storage bucket, and you have to deal with a full-blown data breach?

Then combine this information to score the risks you’ve identified by severity. This will allow you to know which risks to prioritize when mitigating.

Developing risk mitigation controls

This is where you decide how to handle identified risks. For example, encrypting data to reduce the impact if data somehow falls into an attacker’s hands. Or coming up with ways to tighten access controls (e.g., multi-factor authentication).

If the risk is too high, you can choose to avoid using the cloud resource altogether. Alternatively, you could transfer the risk to a third party by purchasing cyber insurance.

Implementing risk mitigation controls

Here, you put the strategies you developed in the previous step into action. It involves deploying technical security controls, such as improving IAM policies, encryption and key management, and backing up your data to have a newer restore point.

To cover all areas, you can also educate employees on the new policies and best practices so that everyone understands their role in maintaining security.

Continuous monitoring

After applying fixes, you’ll still need to monitor your cloud environment constantly. Why? Because cloud environments are dynamic, and new risks can emerge at any time. The best approach is to enable continuous monitoring so that you can identify and mitigate risks before they materialize.

This is the general process you would follow to manage cloud risks. Following this process is essential, but without a common standard, you may end up approaching it in fragmented ways. This might leave gaps in your cloud security setup.

To solve this, several frameworks have been developed to bring structure to the cloud risk management process.

Which frameworks can you use to guide cloud risk management?

There are several frameworks you can use to guide risk management in cloud computing. Some of these frameworks are specific to cloud computing, while others are general but with cloud computing add-ons.

NIST Cybersecurity Framework (CSF)

NIST CSF is a general-purpose framework established to help organizations manage and reduce cybersecurity risks. It’s built around five key functions:

Identify.
Protect.
Detect.
Respond.
Recover.

These functions are similar to the cloud risk management process. NIST CSF is a flexible framework that you can adapt for cloud risk management in your organization. In other words, what is specified in the five key functions can be applied to cloud environments to manage risks.

See: NIST CSF 2.0

NIST SP 800-37

This framework provides a structured 7-step methodology for risk management (slightly more detailed than what is covered by NIST CSF). Although it was originally developed with on-prem government systems in mind, its principles apply to cloud environments.

It integrates with other cloud-specific NIST publications, such as NIST SP 800-53. This allows it to cover cloud-specific topics such as the shared responsibility model.

See: NIST SP 800-37 Rev. 2

CSA Cloud Controls Matrix (CCM)

This is considered the standard for cloud security and privacy. It provides a comprehensive checklist of security controls and objectives for risk management in the cloud. It is designed to help organizations identify risks and controls, standardize risk assessments, and clarify who’s responsible for which controls in the shared responsibility model.

See: CSA CCM v4

There are many other guidelines you can use to manage cloud risks, with some covering specific areas. For instance, NIST SP 800-144 (Security and Privacy in Public Cloud Computing), NIST SP 800-57 (Key Management - Encryption), etc.

Knowing the process and the frameworks to use is only half the job. You’ll need tools to get the job done.

Which solutions and tools can you use for cloud risk management?

Cloud risk management is a complex process, and it’s nearly impossible to do it manually. This is why there is a set of tools and solutions to help your organization manage its cloud risks. You can use the tools provided by your CSP and complement them with third-party tools in the market.

Cloud provider-native tools

Most major CSPs (AWS, Azure, and GCP) include built-in tools that help with monitoring, compliance, and reducing risks associated with cloud computing. Some of them include:

AWS - AWS Security Hub for general security operations, AWS GuardDuty for continuous monitoring.

MS Azure - MS Defender for Cloud for threat detection and Azure Policy, which helps with compliance rules.

GCP - Security Command Center, which is a central security dashboard and Cloud Audit Logs for monitoring.

Third-party cloud risk management tools

Although they may not cover every aspect of cloud risk management, these tools are pretty useful if you’re operating within one provider’s ecosystem. If you have assets across different cloud providers, or you want more functionality than what CSPs offer, you can always turn to third-party risk management tools such as:

Cloud Security Posture Management (CSPM) tools

These tools automate identifying cloud security risks, such as misconfigurations and compliance violations, by continuously monitoring your cloud environment. They can do this across multiple clouds and hybrid cloud environments.

They connect to your cloud environments via APIs, look for risks, and flag the risks they find. Some of them offer automated remediation, where they automatically fix a risk they identify.

Examples: Prisma Cloud by Palo Alto Networks, Wiz, and Orca Security.

TopScan complements these CSPM solutions by continuously scanning internet-facing cloud assets such as public web applications, APIs, and exposed services for known vulnerabilities and misconfigurations. By correlating findings with CVE and CVSS data and prioritising the most critical issues in a single dashboard, TopScan helps security teams address high-risk exposures in their cloud perimeter as part of a broader cloud risk management strategy.

Cloud Workload Protection Platforms (CWPPs)

These solutions protect cloud workloads, that is, applications, services, and processes running in the cloud. Instead of protecting the broader cloud infrastructure, CWPPs focus on individual components such as virtual machines, containers, or functions running in the cloud.

Examples: Prisma Cloud (it also includes cloud workload protection) and Check Point CloudGuard.

These tools are crucial to managing risks in your cloud environment, but technology alone isn’t enough. Disciplined best practices are what protect your cloud environment long term. So let’s look at the best practices you should implement.

Which best practices should you follow when managing risks in cloud computing?

To mitigate as many cloud risks as possible, here are the best practices you should follow.

Understand your role in the shared responsibility model

Understanding your role in this model is important because failure to do so creates dangerous security gaps. Generally, your CSP is responsible for the infrastructure, while you’re tasked with:

Data security.
Access control through identity access management. Guidelines such as NIST SP 800-63B (Digital Identity Guidelines) provide detailed requirements for identity proofing, authentication, and access management.
Network and firewall configuration.
Protecting devices and endpoints (laptops, phones, etc.) used to access your cloud environment.
Application security.

You’ll also need to understand the different responsibilities for different service models. Whether IaaS, PaaS, or SaaS.

Implement best practices to protect data

Data is your most valuable asset in the cloud. Luckily, CSPs provide several security controls to mitigate data security risks for your data in the cloud. These include:

Access control via IAM.
Encryption for data at rest, in transit, and in use. CSPs combine this with key management (a way to secure keys used in encryption). You can find out how to manage encryption keys in NIST SP 800-57 Rev 5.
Proprietary data loss prevention services (for example, Cloud DLP in GCP).
Tokenization and anonymization.
Back up and recovery.

Be sure to check out our guide on Cloud Data Security to learn how you can secure data in the cloud.

Employ a multi-layered defense strategy

Employing multi-layered security controls allows different controls to be fail-safes for each other. For example, having a virtual private cloud and combining it with firewalls and DDoS protection. If an attacker gets past one control, the other can prevent them from breaking into your cloud environment.

Adopt and modify a structured risk management framework

We’ve established how important it is to use a standard framework when carrying out the risk management process. To create a strong risk management foundation, base your policies and processes on a recognized framework like NIST SP 800-37. A framework such as this one ensures that your internal risk management policy doesn’t leave out important parts.

Another best practice would be to combine it with a checklist like CSA CCM to cover all areas that need to be protected.

Monitor your cloud environment continuously

Most importantly, you’ll need to deploy continuous monitoring solutions. This is because your cloud environment is constantly changing, and you’ll want to identify risks that appear and mitigate them early. Here, you can enable monitoring and logging for your cloud environment and combine this with a third-party CSPM solution.

Lastly, don’t forget about the basics like training staff on new policies and conducting risk assessments regularly.

Up to this point, we’ve covered most of what you need to know regarding cloud risk management. But cloud environments are different. You could be using the public cloud, private cloud, or combined your data center and the cloud (hybrid cloud). Let’s look at how cloud risk management looks for each cloud environment.

How does cloud risk management look for different cloud environments?

Each cloud environment has a different set of key risks. Because of that, the risk management focus or approach needs to be different. So here is a summary of the key risks across different cloud environments and the appropriate risk management approach.

Cloud Environment	Key Risks	Risk Management Approach
Public Cloud	- Sharing resources increases breach exposure. - Misconfigurations (e.g., open buckets) - Gaps in shared responsibility.	- Enforce strong IAM with MFA and least privilege. - Use CSPM tools for continuous monitoring. - Encrypt data at rest & in transit. - Validate compliance (GDPR, HIPAA, etc.).
Private Cloud	- Insider threats & misuse. - More security responsibility for you. - Patch management & governance challenges.	- Strengthen internal monitoring & logging. - Apply segmentation & strict access controls. - Regular patching & vulnerability scanning. - Align with NIST CSF frameworks.
Hybrid Cloud	- Security complexity across environments. - Data transfer risks between public & private. - Visibility and consistency gaps.	- Deploy unified monitoring solutions. - Standardize policies across clouds. - Use CASBs for policy enforcement. - Encrypt connections & secure APIs.

What does the future of cloud risk management look like?

Cloud risk management is quickly moving towards automation. As a result, the role of AI in this field will only continue to grow. For example, we could see more organizations or CSPs deploy unsupervised machine learning to spot unusual patterns without needing predefined rules.

In addition, now that security teams are leading cloud security efforts, new skills are needed. Especially around IAM, service accounts, API keys, and tokens. In essence, the future of cloud risk management is about adaptability, because the threats keep evolving rapidly.

Key takeaways

Managing risks associated with cloud computing is essential for any organization that relies on cloud services. It enables you to maintain a secure and compliant environment. There is so much to do to manage cloud risks, as the threats are constantly emerging and evolving. Luckily, you have various tools, solutions, and frameworks to help your organization do this.

By combining these with the best practices, your organization will enjoy the benefits of the cloud without exposing itself to the risks.