Why Insider Risk Management Is Key to Data Security and Cyber Resilience

Think of cyber threats and the classic image of a cybercriminal, a hacker in a dark room, will come to mind. 

Those external hackers are a real danger to businesses, no doubt. But some of the biggest threats don’t come from the outside at all. They come from the inside.

Insiders already have access to your systems, data, and tools. That means one mistake or one bad decision can cause just as much damage as a skilled hacker. The data from 2024 shows that a staggering 83% of companies were affected by an insider attack.

So, how do you reduce the risk of insider threats? Having an insider risk management strategy can help detect and mitigate the risks posed by individuals who already have access to your systems.

In this article, we’ll help you understand this costly problem. We will also share tips to help you build an insider risk management strategy.

What is Insider Risk Management?

Insider risk management is the practice of identifying, assessing, and reducing risks that come from inside an organization.

These risks can come from both intentional and unintentional actions by people who have authorized access. This includes current and former employees, contractors, and business partners.

Successfully implemented insider risk management programs can significantly reduce the possibility of a system compromise or data breach. This, in turn, can save an organization a substantial amount of money while protecting its reputation and maintaining customer trust.

In its 2024 report, IBM found that 32% of organizations that experienced insider threats spent an average of $100,000 to $499,000 to recover fully.

What are the Different Types of Insider Risk

Insider risk can take many forms. Here, we’ll take a look at the most common types of insider threats:

1. Malicious Insider Threats

These threats occur when those with authorized access to an organization’s systems or data intentionally misuse their privileges to cause harm.

These people are often driven by personal reasons like financial gain, revenge, or personal grievances. This can include a disgruntled employee who has been passed up for a promotion or a recently fired employee. Their actions can include stealing trade secrets, sabotaging systems, or leaking sensitive data.  

In 2022, an X employee was arrested for selling the private information of X users to Saudi officials and the Saudi Royal family in exchange for bribes. According to the U.S. Department of Justice, the employee “acted in secret as an agent of a foreign government targeting dissenting voices.”

2. Negligent Insider Threats

This is the most common type of insider incident by a large margin. More than half of all insider threats are caused by a careless or unintentional employee.

A negligent insider is not trying to cause harm. Instead, they accidentally cause a security issue due to carelessness or a lack of awareness.

The most common example is falling for a phishing scam. Other examples include misconfiguring security settings or emailing a sensitive document to the wrong person by accident. These are simple human errors.

One real case example is of a Dallas Police employee who accidentally deleted case files. In an attempt to transfer old case files from a cloud-based archive to a local server, the employee deleted 22.5 terabytes of case files.

3. Compromised Insider Threats

The compromised insider is a mix of internal and external threats. In this scenario, an external hacker takes over an insider’s account.

The insider is a pawn who has been manipulated. The hacker can then use the insider’s legitimate access to steal data. This often happens through social engineering. For example, a scammer used a phishing phone call to gain access to the customer support systems at the trading platform Robinhood.  

This is becoming increasingly common as cybercriminals realize it’s often easier to steal legitimate credentials than to break into systems directly.

How Insider Risk Affects Data Security

Insider threats can cause massive financial, legal, and reputational damage to an organization.  

The financial impact is staggering. The average annual cost of managing insider risks has reached $17.4 million per organization. The healthcare and pharmaceutical industries were hit the hardest, with average costs reaching $29.2 million. The technology and software sectors followed, with average costs reaching $23 million.

But the damage doesn’t stop here. Insider incidents can tarnish the reputation of a company and erode client trust. This is often much harder to rebuild than financial losses. Once clients doubt your ability to protect their sensitive data, winning back their confidence and future business can be an uphill battle.

Legal exposure is another serious risk. Consider you run a law firm that handles sensitive litigation like the Paragard lawsuit. According to TorHoerman Law, the Paragard IUD lawsuit claims that the Paragard IUD can break while in use or during removal. That led to internal injuries and other health problems.

To determine eligibility and Paragard lawsuit settlement amounts, plaintiffs rely on attorneys to safeguard confidential medical records. If a careless paralegal mishandles or leaks documents, your firm could face financial penalties

This is why insider risk management is a core business issue, not just an IT problem. Protecting sensitive data is important for safeguarding your clients, your credibility, and the future of your organization.

Tips to Build a Strong Insider Risk Management Strategy

Here are some key strategies that can help you build a robust defense against insider threats.

1. Use Smart Monitoring, Not Spying

The first step in managing insider risk is to see what is happening. Monitoring user activity, however, doesn’t mean you must spy on your employees. Spying is secretive and creates distrust. Instead, monitoring is about establishing a baseline of normal behavior and being able to spot unusual patterns that might indicate a problem.

The key is to use smart monitoring tools that focus on user behavior. Modern tools like User and Entity Behavior Analytics (UEBA) make this possible. They are designed to recognize patterns, not pry into personal details.

For example, a system can flag it if an employee suddenly accesses a large number of files they do not normally use. It could also spot an attempt to download a huge amount of data to a personal device. That way, you can step in before a simple mistake or a malicious action turns into a serious incident.

2. Adopt the Principle of Least Privilege

PoLP, or the principle of least privilege, is a core security concept. It means giving people only the minimum access they need to do their job and nothing more.

For example, a marketing specialist does not need access to employee salary data. Likewise, a finance specialist must not have access to your website or application’s source code. Restricting access reduces the ways sensitive information can be exposed.

This simple idea has big benefits. If an account gets compromised, the attacker can only reach a limited set of systems. This dramatically lowers the impact of a breach. It also cuts down on mistakes. This is important since 95% of data breaches in 2024 were linked to human error.

To implement the principle of least privilege, identify what data and systems each employee needs to do their job. This often reveals that many people have far more access than necessary. Scaling that back not only strengthens security, but also makes your business environment leaner, safer, and more resilient.

3. Enable Multi-Factor Authentication

Passwords alone aren’t enough anymore. People often reuse them, write them down, or pick weak ones. That makes enabling multi-factor authentication (MFA) important.

It’s one of the most effective ways to protect user accounts, as it requires more than one step to log in. This adds an extra layer of security. It protects against phishing scams and stolen credentials, which are a major cause of data breaches.

MFA is highly effective. One study published on ResearchGate found that more than 99.99% of Microsoft Azure Active Directory accounts that used MFA remained secure throughout the investigation period.

Notably, not all MFAs are equally strong. Attackers have found ways to bypass traditional MFA methods. For example, they can trick a user into giving up their login credentials and a one-time code through phishing. Another tactic is to send a user many push notifications, hoping the user will get tired and approve a fraudulent request. This is called MFA fatigue.

The most effective solution is to use phishing-resistant MFA. In this attack, a criminal sends repeated login requests to a user’s device. The attacker hopes the user will eventually get frustrated and approve one of the requests just to make them stop.

4. Perform Regular Security Audits

Don’t set up the insider risk management program and forget about it. It’s important to perform security audits regularly.

Review documentation, inspect physical assets, test cybersecurity measures, and interview employees regularly to see if they understand security rules.

This helps uncover vulnerabilities you might not notice in day-to-day operations. For example, you might discover outdated software that needs patching or overly broad access controls that should be tightened. 

The real benefit of audits is staying proactive. Instead of waiting for a breach to reveal weaknesses, you find and fix them early. Over time, this habit builds resilience, strengthens compliance, and ensures your insider risk management program continues to evolve alongside new threats.

In short, regular audits keep your security sharp, your employees prepared, and your organization one step ahead of attackers.

Building a Culture of Trust and Safety

Insider risks are a significant and costly threat to every business. But you can protect yourself from it if you take a proactive approach. These strategies give your organization the tools it needs to spot risks early and respond effectively.  

That said, technology alone won’t solve the problem. The human element is just as important. Empower your team with the right knowledge through regular security training, and they can make smarter choices.  

Ultimately, insider risk management protects your data, employees, and reputation. When done effectively, it strengthens your security and makes your business much more resilient to cyber threats.