Cyber-risk quantification benefits and best practices
It's not enough to know cybersecurity threats exist. More importantly, companies must understand cyber-risks in ways stakeholders can measure and discuss.
Modern businesses confront cybersecurity threats on a daily basis. Most they can effectively neutralize, but successful attacks can result in data breaches, financial losses and reputational damage.
In this article, we explore cyber-risk quantification, its benefits and how it can help influence key stakeholders.
What is cyber-risk quantification?
Cyber-risk quantification is a structured approach for evaluating and measuring an organization's cyber-risk. A number of cyber-risk quantification models are available, among them Factor Analysis of Information Risk (FAIR) and The Open Group Risk Taxonomy (O-RT). Both offer consistent methodologies to quantify cyber-risk. They enable organizations to establish baselines for risk assessments, determine cyber-risk appetites and measure levels of cyber-risk exposure.
FAIR, one of the most widely used cyber-risk quantification frameworks, is based on the premise that cybersecurity risks can be quantified in financial terms like any other business risk. It considers factors such as the value of the asset, the likelihood of a threat actor exploiting a vulnerability and the potential impact of an incident on the organization.
One way to calculate risk is to multiply the impact of the negative event if it happened by the probability it will happen.
The benefits of cyber-risk quantification
Cyber-risk quantification offers several benefits to organizations. First, it gives security leaders a clear understanding of the financial impacts of a successful cybersecurity attack. This helps organizations make better decisions about their cybersecurity investments and resources, based on their risk tolerance levels.
Cyber-risk quantification lets the security team share a common language with key stakeholders, such as executives and board members.
Second, cyber-risk quantification lets the security team share a common language with key stakeholders, such as executives and board members. By quantifying cyber-risk in financial terms, security leaders can articulate the potential impact of a security incident in a way that resonates with business execs.
Identifying cyber-risk is just one part of the cyber-risk quantification equation, of course. It is equally important to use that information to influence others, particularly executives and board members.
Consider the following best practices for measuring cyber-risk and communicating that information strategically:
Identify critical assets. Determine the critical assets and systems that are essential to the organization's operations and prioritize their protection.
Use a structured approach. Use a cyber-risk quantification framework, such as FAIR or O-RT, to ensure a consistent and repeatable methodology for risk assessment.
Collect relevant data. Collect relevant data on threats and vulnerabilities, as well as their potential impacts on assets and systems.
Consider multiple scenarios. Assess different scenarios, weighing the probability of a given security incident occurring and its potential impact on the organization.
Translate cyber-risk into financial terms. Use cyber-risk quantification to translate cyber-risk into monetary terms and demonstrate the potential financial impact of a security incident on the organization.
Communicate in language that resonates with the business. Use language that clicks with key stakeholders, particularly executives and board members. Speak in terms of risk tolerance and financial impact, rather than relying on technical, security-specific jargon.
Provide regular updates. Give timely updates to highlight the organization's cyber-risk exposure and demonstrate the effectiveness of cybersecurity initiatives.
Cyber-risk is part of every standard business environment. But these threats shouldn't stall business; instead, they should be factored into the overall risk environment. The more often security professionals can turn known threats into quantifiable business risks, the better equipped their organizations are to run adaptable, successful operations.
