Cyber Risk Management
Cyber attacks today are complex and impact businesses on multiple levels:
- Loss of business continuity
- The cost of disaster recovery
- Regulatory fines and non-compliance penalties
- Reputational damage
- And in some cases, direct payments to the attackers.
There has been a surge in cyber attacks over the years with attackers consistently becoming more organized and sophisticated. Ransomware attacks have taken on new forms and increased by 151% just in the first half of 2021 (according to Forbes), and the number of new vulnerabilities found in 2021 was in excess of 18,000, according to NIST. According to the US treasury department, $590 million was paid out in ransomware attacks in the first half of 2021!
Along with the increasing number of attacks and new methods, the regulations, non-compliance penalties, and laws regarding the protection of private data have all significantly increased as well. A rise in the use of digital technology creates additional entry-points that need securing, and cybersecurity budgets are limited. All of these factors require business organizations to re-evaluate their cyber risk using new and better models to implement effective cyber risk management.
Factors that need consideration in order to reduce the risk of a security incident and ensure business continuity, include determining a budget for:
- A dedicated team of Security Officers
- Disaster recovery plans
- IT processes and systems
- Legal affairs
- Cyber Insurance
Likelihood and impact have been traditionally used to measure risk and certainly have their place. In order to make business decisions (i.e. how much money and human resources to allocate to and invest in a cyber resilience program), it is crucial to understand risks and threats in monetary and business terms. This introduces the need for cyber risk quantification.
What is Cyber Risk Quantification
Translating cyber risk into monetary and business terms creates a clear understanding to make informed decisions, and is done via quantitative cyber risk. Using financial terms to define the outcome of risks removes guesswork and expresses consequences in accurate terms that business strategists can understand. This enables cyber risks to be realistically represented and integrated into strategic business decisions.
An organization needs to identify the key processes, systems and other assets that their business relies upon to function in order to prioritize and assign levels of importance to each element. Quantifying risk will enable decision makers to easily assess which assets will be affected by an attack, the consequences of such events, costs of mitigation controls and their financial inherent and residual risk. Risk quantification provides a way to accurately measure which security controls are worthwhile financially and discover how much risk has been reduced with each control.
How to Measure Cybersecurity Risk
Assigning monetary value to risks can be done in a number of ways, though it is not an exact science. A number of cybersecurity frameworks are available to help quantify risk. The most popular framework to quantify risk is definitely the Factor Analysis of Information Risk. It applies dollar value at risk (VaR) to understand, analyze and quantify cyber risk in financial terms and can be used alongside other risk frameworks. Some use the Monte Carlo Simulation Model which is a computerized mathematical technique used to calculate risk in quantitative analysis. It’s general advantage is its ability to factor in a range of values but that can be a disadvantage too when we are looking for focused accurate quantification. The output with the Monte Carlo model is only as good as its input.
Cyber Risk Quantification Use Cases
Quantitative cyber risk is a practical tool for Cyber Insurance companies, who must assign monetary value in order to assess and value their clients cyber risk and achieve underwriting objectives. Private Equity firms use risk quantification to ascertain their Returns on Investment (RoI) and manage their portfolio risk, assessing potential investments and acquisitions. Risk quantification is applicable wherever risk impacts the company objectives and wants to be understood in clear financial terms.
Using Cyber Risk Quantification to Get Ahead
Now that you know you can put a dollar value on your company’s risk, can you afford not to? The goal is to always strengthen cybersecurity resilience, maturity and posture. Quantifying cybersecurity risk will drive this goal to fruition. The insight gained through assigning a dollar value to a risk will create visibility, increase cooperation and understanding between cyber risk and business teams, and align objectives across the board for the most effective management of cyber risks.
To determine the most effective way to quantify your company’s risk, contact us at Centraleyes and see what our next-generation automated risk management platform can do for you.
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