Whichever firm that quantifies risks in a way that leads to the smartest cyber investments enjoys boosted business resilience and cyber-agility.
As business environments evolve in the pandemic era, strengthening the governance, risk and compliance (GRC) strategy to protect company data and eliminate the risks of data breaches is becoming increasingly urgent and complex amid exponential surges in cyber threats.
The focus on bolstering cyber resilience has expanded from deploying new cyber defence technologies to adopting a more proactive approach that involves predicting and managing risks. But how do you quantify cyber risks, specifically in monetary terms?
Organizations usually assess risks through the traditional approach, where they detect possible cyber threats, determine the cause(s), and assign severity with high, medium, and low ratings (known as red, green and yellow categories).
While this straightforward measurement scale prepares organizations for attacks before they even happen, it is open to misinterpretation and uncertainty as it does not offer a holistic view of the threat actors. However, by expressing cyber risk exposure in a comprehensive and precise manner, businesses can gather a much clearer sense of the risks, minimizing debate and confusion about which are the most dangerous, why they are ranked that way, and which technologies and strategies should be adopted to mitigate them. The data provided by quantification gives them the insights they need to achieve a more accurate risk assessment.
Bolstering cyber risk quantification
After identifying the risks and their impact levels with quantitative weighting, business leaders can turn the remaining unpredictability into a competitive advantage.
Measuring cyber risks in financial terms allows business leaders to weigh the pros and cons of these risks to offer a solid contingency plan and make data-driven decisions on where to invest so as to derive the greatest value from such expenditures.
Cyber risk quantification provides broader visibility into the threat landscape and what is at stake in terms of the dollar value. Knowing the cost of falling victim to such risks allows organizations to prioritize cybersecurity investments and develop cybersecurity programs in line with business goals.
Regular comprehensive quantitative risk analyses will offer an in-depth understanding of the risk impact on the organization at any point of time.
Six tenets of effective cyber risk quantification
To keep score effectively, here are six points to consider:
- Establish a common risk language. While people in the organization broadly understand the terms used in the risk landscape, they may have varying definitions for IT asset, threat, or vulnerability. This may cause disorder and make it difficult for business leaders to communicate and defend decisions in managing risk. Businesses must go back to the basics and standardize nomenclature as much as possible.
- Involve other functions. Quantifying cyber risk goes beyond the functions of the IT department. It is important to engage with other divisions in assessing risks and analyzing various risk scenarios, to ensure different perspectives are taken into account in each case. This will provide more comprehensive risk data.
- Re-quantify periodically. The cyber threat landscape is constantly and rapidly evolving. The top risk on the table today may fall under the radar in just a year. To guarantee that risk assessment maintains its accuracy, organizations must re-quantify their risks at regular intervals.
- Keep it simple. Trying to cover all possible risks and threats at once is neither efficient nor effective. Avoid working on several risks simultaneously, and focus instead on one use case at a time.
- Automate wherever possible. Statistics and science are the foundation of cyber risk quantification processes. Manual quantification processes could be complex and time-consuming, thereby causing more problems for the organization. Software solutions can automate workflows, measure risks faster, and augment the accuracy of results.
- Remember that quantification is not a panacea. Cyber risk quantification should not eliminate other IT and cyber risk management processes, and more importantly should not replace cyber defense efforts. The value of cyber risk quantification is improved when it is supported by risk monitoring, qualitative assessments, internal audits, and issue management processes.
As threats evolve, a mature GRC program becomes more critical, not only to combat cyber threats but to also enable organizations gain a competitive advantage that ensures business continuity and resilience. Business leaders must begin to work on their GRC strategies and adopt the right tools to better understand the impact of each element and the value to be gained should the risk be mitigated. While assigning monetary value to risks can be a complicated process, it guarantees accurate insights that support strategic business decision making.