Cyber risk is continuously evolving. Companies are dealing with different threat actors and events every day, which is why cyber is the fastest-growing risk for many enterprises, and why cybersecurity ranks among the top priorities for global organizations.
The increase in cyber risk is largely due to the evolution and adoption of technology among companies. After all, technology is an essential part of the strategy to grow any organization. Cloud computing, AI, social media platforms, and other technologies are increasingly being leveraged to obtain a competitive advantage in the market. The ability to improve efficiency can potentially be the key driver to increase value to the organization. So, how do companies respond to this escalating cyber risk challenge and grow the business while being mindful of the bottom line? What should be the priority? These are the questions the senior leadership of every organization should be asking themselves.
It is the responsibility of the organization’s risk team to help senior management ensure the risk appetite and response plan is strategically aligned with the enterprise’s long-term objectives. One of the best ways to do this is to quantify risk when and where possible. Risk quantification involves measuring risks to assess the range of potential outcomes. It is predominantly concerned with determining which risk occurrences deserve response. It also allows the enterprise to rank risk in order to prioritize the response because all risks are not created equal. If the organization doesn’t quantify risk, then it increases the possibility of neglecting to implement fundamental safeguards in some areas, while taking disproportionate measures in others.
Cyberrisk quantification (CRQ) communicates cybersecurity risk in terms of financial value to the company. As a result, it helps key stakeholders who are accustomed to making budgetary decisions understand the potential impact of the risk to the organization in fiscal terminology.
CRQ attempts to convert technology language into business language. It’s important for senior leadership to understand the role technology plays in helping achieve the organization’s short-term and long-term business objectives. It’s equally important for leadership to understand the potential incidents and events that could occur to prevent the company from achieving said objectives. Identifying potential fraud, system failure, data breaches, and other business interruptions must be part of the risk management process. Moreover, the likelihood and impact of these possible occurrences and quantifying the potential enterprise losses should be understood, as well.
It’s also worthwhile to identify the preventative, detective, and corrective controls that could be implemented to safeguard against the identified risk and the cost associated with them. This is a process that will require the expertise and input of multiple parties within an enterprise, including functional, financial, and risk professionals.
Ultimately, the risk quantification results should be presented to senior leadership and the board of directors based on the input and analysis of multiple experts who are involved in running the business daily. With sufficient information that includes concrete and objective numbers and figures, the leadership of every enterprise should be able to make sound business decisions that are fiscally responsible and address take cyber risks into account.
Editor’s note: For additional insights on this topic, read Jack Freund’s cyberrisk quantification article in the @ISACA newsletter.