March 13, 2023
Being part of a governance, risk, and compliance (GRC) team is no easy task, as you have to stay on top of evolving expectations and laws, while connecting different business units together in a way that makes sense to other stakeholders. One area that’s been particularly tough to manage recently has been cybersecurity.
From new data security standards to heightened risks around areas like ransomware, GRC teams have their hands full. Because cybersecurity can affect organizations as a whole — such as by tying into financial risk, reputational risk, and operational risk — GRC teams often need to get involved, rather than just leaving cyber risk as an IT issue.
Yet because cybersecurity can be technically complex, it can be hard for those outside of IT to understand what your security posture looks like and what you need to do to strengthen cybersecurity. Communicating cyber risk and cybersecurity strategies to other stakeholders, like boards, can also be difficult.
To overcome these challenges, GRC teams can use cyber risk quantification (CRQ) tools and methodologies. CRQ means moving away from looking at cyber risk in abstract terms and instead objectively measuring cyber risk levels.
That can include things like assigning risk scores, or you could dive deeper with financial quantification, such as by calculating average annual expected monetary losses based on your current cybersecurity posture. Doing so can help put cyber risk into business terms and help all stakeholders get on the same page.
CRQ allows GRC teams to help the business make better ROI decisions in implementing additional controls. The right CRQ tools can also help you inform stakeholders about how you’re managing things like potential financial losses from cyber events and meeting new cyber regulations.
Specifically, tools like Kovrr’s Cyber Risk Quantification platform can help GRC teams:
Many times potential losses are simply calculated by loss per record. While a start to understanding losses, it doesn’t begin to represent the true regulatory landscape financial losses, as many fines are decreased for other reasons. By using a quantification platform that models potential losses taking into account fines that were actually imposed, GRC professionals can more accurately estimate their losses.
If you don’t know what cyber risk means in financial terms, then it’s hard to understand the severity of different risks.
For example, GDPR fines vary widely, however, with cyber risk quantification, risk professionals can better break down parts of the business that can expose the organization to GDPR fines.
For example, cyber risk quantification can show that departments with customer data have better security and therefore if all data records are stored within these departments the likelihood of a GDPR fine is lower.
While you don’t want either event to happen, it’s improbable to eliminate every threat. GRC teams often need to work with stakeholders to prioritize defenses. If they can show that one type of cyber incident would result in a specific financial loss (on average), compared with other specific loss exposures for other events, then you can better prioritize where to make cyber investments, allocate budget, adjust strategy, and more.
By using cyber risk quantification, GRC professionals can track their expected exposures to different types of losses over time, for example regulatory fines, and make sure that their teams are making progress towards reducing their exposure. In addition to sharing financial data related to cyber risk, GRC teams can use CRQ to visually report cyber risk levels to other stakeholders, thereby helping them understand what the impact of a cyber event could be. You can also benchmark cyber risk exposure against peers, which can help spur action. In other words, you don’t have to rely on overly technical information but can instead look at cyber risk data in concrete financial terms.
As new regulations and standards emerge, CRQ tools can help you prepare, such as by understanding issues like third-party cyber risk that you might need to report.
CRQ tools can also help with existing regulations, such as the Payment Card Industry Data Security Standard (PCI DSS). Merchants might struggle with PCI DSS requirements like having strong access control measures. Using tools like Kovrr's cyber risk quantification platform can enable you to get a full view of your IT assets and get a single view of your data sources to more easily assess and report whether you’re meeting regulatory control requirements.
CRQ aids organizations in putting the emphasis on the “G” and “R” in “GRC”, and not only compliance. Understanding your risk in financial terms, can enable you to make strategic decisions and create a roadmap based on the exposures and threats that could lead to real financial loss.
CRQ can help prioritize between compliance requirements and regulations. It could be overwhelming for a GRC team to try and comply with every possible regulation and compliance requirement. CRQ can be used to determine which are worth investing in by highlighting the greatest decrease in potential financial losses.
Overall, CRQ can help GRC teams gain a more thorough understanding of their cybersecurity posture, and they can use these insights to more easily report on cyber issues to internal and external stakeholders.
Want to see how CRQ can help your GRC team? Book a demo.
September 5, 2023
Part two delves into the transformative potential of converting cyber risks from financial insights to actionable plans
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