While risk management is not a new concept to the security industry, condensing the complexity of cyber risk into numbers, known as cyber risk quantification (CRQ), is slowly becoming a major part of security strategies around the world.
Cyber risk quantification refers to the process of measuring, validating, and analysing identified cyber risks in line with available cyber data using mathematical modelling techniques.
While this process is a major feature of integrated risk management solutions, quantifying risk in the digital world has still proven to be a unique challenge for various reasons. One of these reasons is the limited availability of security data.
That, however, is not to say that this effort is futile. According to Deloitte, ‘the recent acceleration in artificial intelligence (AI) and data collection are quickly bringing about advanced modelling techniques for quantifying cyber risk.’
In this post, we explore what cyber risk quantification means and why it needs to be part of your security strategies.
CRQ is an attempt at translating risk into business terms
Risk quantification is designed to provide us with an objective understanding of an organisation’s cybersecurity environment and is used as the basis for security infrastructure investments and risk transfer decisions.
This is similar to how risk (or loss exposure) is measured by risk domains in terms of probability and magnitude of loss in various scenarios. When it comes to this kind of quantification, risk probability is expressed as a percentage (i.e. security ratings), and its magnitude is expressed as a loss in monetary value.
In simple terms, cyber risk quantification is an attempt to communicate an organisation’s level of risk in a language that’s meaningful to company boards, governments, and regulators.
It is a useful tool for security leaders who wish to quantify cyber risk in business terms and educate top management about the impact cyber risks can have on their bottom line.
‘What gets measured, gets managed’
According to the annual Cybersecurity Breaches Survey conducted by the Department for Digital, Culture, Media and Sport, it was reported that almost half of UK businesses have suffered a security breach or attack between March 2019 and March 2020.
While there is an increase in the volume of cyberattacks, this may even be an indicator that businesses now understand what these attacks are and the effect they have on their operations.
The report goes on to state that eight in ten businesses admit that cybersecurity is a top priority for their senior management teams. In this kind of environment, pivoting to a system of cyber risk quantification can be a useful and rewarding exercise.
Apart from the possibility of reporting cyber risk in the same language as other enterprise risks, which are clearly understood by senior management, there are other benefits to quantifying these risks, including:
A better understanding and better management of the financial aspect of cyber risks
The ability to identify and prioritise remediation activities based on financial risk exposure
The ability to test the ROI for proposed investments in cybersecurity technology and solutions
The ability to qualify the need for cyber insurance
Leverage the capabilities of CRQ to reveal and address cyber threats
We now live in a world driven by and saturated with more data than we’ve ever encountered.
With organisations experiencing increasing costs in the face of data breaches and other cyber risks, improving cyber resilience is proving to be a paramount concern.
Today, it’s more important than ever to present insights about a business’ security posture in financial terms to help senior management make more informed decisions. Cyber risk quantification, therefore, bridges the gap between business leaders and technical experts.
RiskXchange is a company founded and led by recognised experts within the security industry, who have held leading roles in companies like IBM Security. Get in touch with us to access an accurate and 360-degree view of the cyber risks across your ecosystem through our powerful security rating solutions.
Leverage the capabilities of cyber risk quantification and access the insights you need to address future cyber threats.