The digitalization of businesses worldwide may be a boon for most people but not for CISOs, CIOs, and IT security professionals. Why? This is because cyber threats are also evolving with the advancing technology, and the people responsible for dealing with them are facing more malicious attacks now than ever.
The hazards are always rising, from malware and ransomware to DDoS attacks and zero-day exploits. As someone tasked with identifying vulnerabilities in the data infrastructure and protecting your organization from security breaches, how do you decide which hazards to address first? Or where should you concentrate your cybersecurity spending?
The conventional strategy would categorize each risk as high, medium, or low. However, this is subjective, and various stakeholders may interpret these classifications differently. While you may think a “medium” risk needs to be addressed, your company’s C-suite executives may argue that it can be accepted. In such situations, it can be challenging to defend your position because the word “medium risk” seems so vague. This is where cyber risk quantification (CRQ) comes in.
If you can link how much a data security breach can cost your organization, you will likely get permission to resolve it as soon as possible. Cyber risk quantification helps you assign a dollar value to your risk so that your business may prioritize cybersecurity investments and drive alignment between data security programs and business goals. This blog will give you a brief overview of cyber risk quantification and why it is important, followed by a detailed account of its challenges, benefits, and best practices.
What is Cyber Risk Quantification?
Cyber risk quantification is calculating the financial exposure to IT and cyber risk. It lets you choose which bets to address first and where to focus your cybersecurity efforts for the greatest benefit.
The value at risk (VaR) or anticipated loss from risk exposure is typically estimated using advanced modeling approaches like Monte Carlo simulations. Here is an illustration below:
Using cyber risk quantification to calculate the financial effect of a risk occurrence, you may reliably respond to queries like “How much should we invest in cybersecurity?” or “What will be the return on investment?” or “Do we have enough cyber insurance coverage?”
Multiple stakeholders benefit from risk quantification. CISOs better comprehend how risks affect their organizations, enabling them to make informed decisions. On the other hand, boards can see more clearly how much money is on the line for the company. Last, executives can prioritize cybersecurity measures and allocate funds for them in a way that does not ruffle any feathers. Now, let’s see why you should quantify cyber risks.
Why is Cyber Risk Quantification Important?
The importance of cyber risk quantification lies in considering not just data security risks but also financial risks associated with it. Quantifying cyber threats leads to decision-makers and security professionals conversing in financial terms instead of cybersecurity jargon, thus helping the former better understand the latter’s intent. The CRQ risk model helps stakeholders understand the value of their security investments without requiring extensive explanations of esoterics, bridging the gap between management and security specialists.
It is not like cyber risk quantification is new, but with the recent increase in the number and danger quotient of cyberattacks, the concept has gained new momentum. Here are some reasons why cyber risk quantification is important:
- Cyber attacks are getting more complex and causing more devastating consequences in monetary terms. This is evidenced by research conducted by Cybersecurity Ventures, which shows that security professionals worldwide expect global cybercrime costs to reach USD 8 trillion annually by 2023.
- With businesses increasingly using AI, IoT, robotic process automation, cloud apps, and other digital technology to accomplish their objectives, the number of attack surfaces is conspicuously greater today. Increased digitization opens even more opportunities for cybercriminals to infiltrate sensitive networks.
- The budget for tackling cybercrime is limited. Compared to the increasing percentage of threats, the financial resources companies need to handle them have yet to see inflation in kind. CISOs must make the best possible investment allocation and decide where to focus security efforts, which they can only do when they know how much risk will cost and how much a specific control might reduce that cost.
- Cyber threats are generally described as “probably likely to occur” or “somewhat likely to impact the business.” However, these phrases frequently raise more questions than they provide answers. Why is it “probably likely”? What distinguishes it from “somewhat likely”? How much risk reduction will be attained if resources are applied to a “probably likely” danger? Thus, more than a qualitative assessment of risks is required in today’s data security and governance climate.
In the following three sections, we will highlight the challenges faced in quantifying cyber risk, how businesses can benefit from a CRQ model, and what best practices you should follow to implement it successfully for your organization.
What are the Challenges Faced in Quantifying Cyber Risk?
Quantifying cyber risks can be difficult because of the following factors:
- Sifting Through Huge Volumes of Data
Organizations still need to deal with asset inventory gaps, which makes it difficult for security leaders to accurately determine their cyber risks and vulnerabilities and comprehend the efficacy of their security measures. Sifting through huge data volumes is time-consuming and labor-intensive, and security professionals may still be unable to analyze the sorts of assaults, their frequency, and the severity of their impact accurately.
- Siloed Data Can be Difficult to Reconcile
Isolated data stored in remote systems or services hinders a comprehensive view of an organization’s cybersecurity landscape. With unified data, it is easier to identify patterns, vulnerabilities, or threats across the entire infrastructure. This fragmentation makes it difficult to quantify and assess cyber risks accurately.
- Partial Remediation
New vulnerabilities and threats emerge rapidly, making it difficult to quickly identify, prioritize, and remediate risk items. The goal of cybersecurity is to stay one step ahead of the competition. Still, the lack of real-time information makes it difficult for security teams to streamline processes that protect organizations from threats. Organizations can remediate risks quickly and effectively with automated, continuous visibility into the attack surface and emerging security issues.
Benefits of Cyber Risk Quantification?
Here are the benefits of measuring and communicating cyber risks in monetary terms:
- Debunk Cybersecurity Jargon in Terms the Board and Executives Can Understand
Presentations on cybersecurity to the board and the executive team may contain baffling technical speak. Consequently, they may fuel the fear, uncertainty, and doubt regarding impending cyber risks at times of crisis. Combining both leads to ineffective decision-making and unsuccessful business analysis.
Comparatively, quantification offers a more complex and understandable understanding of cybersecurity risks. The board and executives can promptly understand the most important and expensive cyber threats to a company. CISOs, in turn, can more convincingly argue that expenditures in cybersecurity are necessary.
- Increase Objectivity and Accuracy in Your Risk Assessment
When you express your exposure to cyber risks clearly and precisely, you reduce uncertainty, as discussed above. There is more debate and clarity about the top three cyber threats, why they are classified this way, or what controls are most appropriate to mitigate these risks. This increases the probability of any risk assessment conducted by a security professional being viewed favorably, leading to all the key stakeholders aligning on how much to spend on any risk-reduction measures together.
- Make More Informed Decisions to Further Safeguard Your Company’s Data Infrastructure
Neither you nor your organization’s board or executive team need to guess which IT and cyber risks to prioritize based solely on your intuition or judgment. With accurately quantified risk data, you understand risk’s true impact and likelihood. You know where to focus your cyber investments and how to mitigate risk per your business goals.
This makes it less likely for you to overreact or overreact to potentially risky events. Instead, you are empowered to make calculated IT and cyber risk management decisions that deliver optimal value. Cyber risk quantification aims to explain how cyber risks translate to monetary troubles so that security leaders and business execs can reach a consensus about their cybersecurity investments.
- Recognize the Efficiency of Risk-Mitigation Measures
It is always recommended that you gain awareness about the effectiveness of a security control before investing in it. You may determine how much risk reduction has been accomplished with each control by quantifying the cyber risk. You can swiftly re-direct your assets to another and better control if you discover that your risk exposure is still significant. Your attempts to reduce cyber risk will be more proactive and successful in this approach.
- Gain a Competitive Advantage
Using cyber risk quantification, you can strengthen your company’s cyber resilience and maturity. It provides you with the knowledge to respond to online threats in a more focused and economical manner. This results in increased customer reputation and confidence.
Businesses that utilize or intend to use quantitative risk assessment models are more advanced in their digital transformation and perform better overall in terms of cybersecurity. Moreover, security executives may identify how their cybersecurity efforts have helped them lower risk and quantify the return on investment of these security initiatives. Thus, you can save more money and invest in other business development activities, which will ultimately put you ahead of your competitors.
Best Practices of Cyber Risk Quantification
Last but not least, here are some best practices to follow to establish the CRQ model at your organization without hassles:
- Identify critical assets: Determine the critical assets and systems essential to the organization’s operations and prioritize their protection.
- Use a structured approach: Use a cyber-risk quantification framework, such as FAIR (Factor Analysis of Information Risks), to ensure a consistent and repeatable methodology for risk assessment.
- Collect relevant data: Collect relevant data on threats and vulnerabilities and their potential impacts on assets and systems.
- Consider various use cases: Consider all the different kinds of cyber incident scenarios and determine how likely a particular security event will occur, followed by its potential effects on the organization.
- Convert cyber risks into monetary terms: Use any CRQ model to put cyber risk into monetary terms and illustrate the possible financial impact of a security incident on the organization.
- Sync cybersecurity initiatives with corporate goals: Show how cybersecurity investments can help achieve strategic business objectives.
- Use terminology that the business will understand when communicating: Use language that resonates with important constituencies, especially with executives and board members. Talk about risk tolerance and financial effects instead of using technical, security-related lingo and other cybersecurity jargon.
- Provide frequent updates: Emphasize the organization’s exposure to cyber risks by providing periodic updates and showcasing the success of cybersecurity actions.
Every conventional business environment is prone to cyber risks. However, rather than putting a stop to activity, these dangers ought to be taken into account when assessing the entire risk environment. For this purpose, you can seek the help of a cybersecurity and compliance firm. These organizations are better prepared to operate flexible and productive operations and help you understand how known threats can convert into quantified business risks.
Managing Cyber Risks and Compliance with Akitra!
Establishing trust is a crucial competitive differentiator when courting new SaaS businesses in today’s era of data breaches and compromised privacy. Customers and partners want assurances that their organizations are doing everything possible to prevent disclosing sensitive data and putting them at risk, and compliance certification fills that need.
Akitra offers an industry-leading, AI-powered Compliance Automation platform and related software tools for SaaS companies. Using automated evidence collection and continuous monitoring, together with a full suite of customizable policies and controls as a compliance foundation, our compliance automation platform and services help our customers become compliance-ready and certified for security and compliance frameworks like SOC 1, SOC 2, HIPAA, GDPR, PCI DSS, ISO 27001, ISO 27701, ISO 27017, ISO 27018, NIST CSF, NIST 800-53, NIST 800-171, FedRAMP, CCPA, CMMC, and more such as CIS AWS Foundations Benchmark, etc. In addition, companies can use Akitra’s Risk Management product utilizing both FAIR and qualitative NIST methodology for overall risk management for your company, Trust Center, and AI-based Automated Questionnaire Response product to streamline and expedite security questionnaire response processes, delivering huge cost savings. Our compliance and security experts will provide customized guidance to navigate the end-to-end compliance process confidently.
The benefits of our solution include enormous savings in time, human resources, and cost savings, including discounted audit fees with our audit firm partners. Customers achieve compliance certification fast and cost-effectively, stay continuously compliant as they grow, and can become certified under additional frameworks using a single compliance automation platform.
Build customer trust. Choose Akitra TODAY!
To book your FREE DEMO, contact us right here.