Blog Post
February 15, 2024
TL;DR
Market success has often demanded that business leaders take risks. Some of the most profitable executives are those who have pursued bold initiatives, recognizing, despite the dangers, the potential rewards. However, as organizations grow and become more complex, the costs of these risks rise, demanding a more data-driven approach to its management.
Indeed, effective enterprise risk management requires an in-depth knowledge of an organization's contextual intricacies. Any risk practitioner would agree that it's impossible to adequately mitigate vulnerabilities without clearly understanding the company's assets, systematic structure, and specific external threat landscape first.
Amidst the ever-expanding spectrum of risks faced by modern enterprises, one looms larger than the rest: cyber. While adopting digital tools and migrating essential business processes to the cloud heightens productivity and output levels, it intrinsically increases an organization's likelihood of experiencing a cyber attack and suffering irreparable damage.
With the costs of global cyber attacks climbing annually, stakeholders have finally accepted the critical need for rigorous cyber risk assessments that can illuminate the organization's unique vulnerabilities in the digital realm. Unfortunately, while there are many cyber posture assessments available, the majority of them fall short of providing the information necessary for developing data-driven action plans that effectively balance risk and reward.
Financial cyber risk quantification (CRQ), conversely, can elevate these assessments’ insights, transforming them into communicable metrics that drive strategic decision-making. This shift, directly facilitated by CRQ, from ambiguous results to objective, defensible data allows all executives to make informed decisions that simultaneously protect the organization's most valuable assets while encouraging calculated risk-taking that safely drives business growth.
There are a multitude of available cyber risk evaluations that help chief information security officers (CISOs) become more aware of the nuances of their organization's unique vulnerabilities. Some of them analyze overall cybersecurity posture, while others dive deeper into specific areas of cyber risk, such as compliance and incident response planning.
Three of the most widely used cyber risk evaluations are:
Framework maturity ranks a business's cyber defenses according to predefined levels, each of which is defined by specific processes and practices. BIAs explore the potential impacts of an event, and cyber risk posture scores are numerical ratings calculated based on various factors related to cybersecurity.
Unfortunately, despite the various insights they can illuminate, each of these cyber risk evaluations ultimately falls short of being able to provide CISOs with the data necessary to develop holistic, data-driven action plans that ensure appropriate initiative prioritization.
Cybersecurity maturity assessment frameworks were initially created for cyber teams to be able to evaluate their program’s strengths and weaknesses based on a standardized rubric. Cybersecurity maturity models such as NIST CSF, CIS, and the Cybersecurity Maturity Model Certification (CMMC) provide specific maturity rankings that allow CISOs to categorize and thus communicate cyber competency.
For example, within the CIS framework, there are 18 fundamental controls, or categories, in which organizations can be ranked as IG1, IG2, or IG3. As these organizations apply more safeguards, they move up a level, demonstrating maturity. Although it’s impressive to move up in rankings, it unfortunately communicates very little other than incremental progress.
Cyber risk quantification transforms maturity assessment progress into quantified insights that have real-world implications. Instead of merely explaining to the board that your organization upgraded to the next maturity level, CRQ enables CISOs to demonstrate that the company has decreased its likelihood of experiencing an event, as well as reduced potential financial losses.
By having access to the amount of financial savings a control upgrade results in, CISOs can justify initiative prioritization and demonstrate ROI. For instance, in Figure 1, if the evaluated organization decided to elevate its CIS Control 4 level from IG2 to IG3, it would decrease the financial risk by nearly $100,000, which is quite a significant amount. These savings can also be weighed against the cost of implementation to determine if the upgrade is cost-effective.
Translating cybersecurity maturity assessment results into quantified objective figures allows cybersecurity leaders to collaborate with other C-suite executives and board members and collectively decide which initiatives are worth pursuing and prioritizing in the context of the broader business goals, risk appetite, and safeguarding the most valuable digital assets.
BIAs can be used to evaluate any type of business interruption, including natural disasters, workplace accidents, or emergencies before they occur. CISOs and risk managers will also, of course, leverage them to analyze the potential ramifications of a cyber event, delving into the broader implications that extend beyond the technical realm and allowing them to prepare as best as they can for specific scenarios.
The process of conducting a cybersecurity BIA first involves brainstorming a list of potential cyber events that may occur. Then, the various business units that would be affected by this incident need to be documented, along with the specific details regarding this impact, including any operational downtime it would cause, given the data relevant personnel have access to and the processes they control.
The underlying goal of a business impact analysis is to illuminate which processes, departments, and technology are essential for business continuity and define ideal response and recovery metrics. After assessing all of the gathered data, cyber risk managers will then rank the various business units and processes according to their potential impact, providing a blueprint for investment prioritization.
While a business impact analysis can help organizations discover where their most critical business components are positioned, it falls short of providing an objective assessment of potential impact. On top of being indefensible, the subjective nature of the rankings leaves room for error.
What one concludes to be "critical" in nature may actually be "moderate" to another evaluator. Moreover, if there is more than one business vulnerability that's categorized as "critical," it's impossible to discern which area to invest in and mitigate first.
Cyber risk quantification platforms like the one offered by Kovrr solve this issue by translating the consequences of potential interruptions into monetary metrics. CISOs are provided with defensible data that enable them to prioritize initiatives based on financial loss amounts. Equally as valuable, CRQ leverages external global intelligence to determine the likelihood of specific scenarios actually occurring, ensuring resources are invested more appropriately.
Additionally, CRQ solutions can much more easily illuminate the granular levels of a cyber event. A BIA, which is already labor and resource-intensive, will only provide an analysis of a singular event, such as a ransomware incident. To evaluate the potential impact of a data breach, an entirely new BIA would need to be conducted.
A CRQ, however, offers all of this information simultaneously, giving both a high-level overview and a more detailed breakdown of event types, loss scenarios, and attack vectors according to their likelihood of occurrence and respective expected financial impacts. This nuanced understanding enables organizations to tailor their cybersecurity strategies to address the unique challenges posed by their specific operational landscape.
Cyber risk posture scoring has been widely adopted amongst organizations in the previous decade, offering risk managers a somewhat quantitative approach to assessing their cybersecurity posture. This score is a numerical representation that is meant to provide a standardized measurement that CISOs and other cybersecurity leaders can communicate to the board and other C-suite members.
The process of calculating a cyber risk posture score involves evaluating various cybersecurity factors such as system vulnerabilities, threat intelligence capabilities, existing security controls, incident response preparedness, and employee awareness. Risk managers will then typically create internal formulas that compute the results and generate a final numerical measurement of cybersecurity.
This score offers a solid foundation for organizations to evaluate their cybersecurity posture over time. For instance, if a score increases by 10%, it’s a solid indicator that the security program has improved and that the business is better prepared than it was in the case of an event.
Unfortunately, much like a security control upgrade, progress can only be interpreted in comparison to previous scores. It does not communicate how much an organization has objectively decreased its risk or its financial exposure, nor does it offer any insights into the specific actions that could be taken to reduce this score any further.
This final score, while offering contextualization, usually does not help CISOs formulate data-driven initiatives that target the most potentially costly, impactful events.
Instead of requiring CISOs and cyber risk managers to create formulas, conduct various assessments manually, and apply subjective scores to the outcomes, on-demand cyber risk quantification solutions automatically transform an organization's posture into defensible figures. Leveraging integrations and incorporating a business's unique system structure, CRQ does not rely on internally gathered data and, therefore, produces much more reliable results.
Combining this internal cybersecurity posture information with external global intelligence, a CRQ assessment provides a clear understanding of how likely the organization is to experience a specific type of cyber event, along with the respective financial losses that may be incurred. These figures empower CISOs to prioritize subsequent cybersecurity efforts based on both the severity of threats and their potential economic impact.
Additionally, much like a cyber risk posture score, on-demand CRQ results offer both risk managers and higher-level executives a baseline for comparing progress. However, unlike the risk score, any reduction in cyber event likelihood or financial ramifications equips organizational leaders with the data necessary for optimizing budget spend and risk appetite levels.
CRQ outcomes much more effectively translate cyber risk into broader business terms that can be leveraged to ensure resiliency in the wake of an attack.
While traditional cybersecurity risk assessments undeniably have their benefits, illuminating key insights into an organization's strengths and vulnerabilities regarding a potential cyber event, they often fall short of delivering actionable data required for high-level communication or effective decision-making.
The limitations of maturity framework assessments, BIAs, and cyber risk posture scoring become evident in their subjective nature, lack of objective metrics, and inability to offer a more comprehensive view of potential risks.
By pairing these more traditional cyber risk evaluation methods with a CRQ solution, CISOs can transform ambiguous results into quantifiable, defensible information, driving collaboration and ensuring cyber risk initiatives are prioritized according to broader business objectives.
As the market becomes more volatile and competitive, organizations must take bolder moves to meet growth targets, even as they deal with an increasingly risky cyber risk landscape. This reality demands embracing CRQ as a fundamental tool to drive more targeted strategies that will keep the business resilient. Indeed, navigating the intricacies and evolution of cyber risks in the modern age is going to require objective data-driven insights.
To augment your cybersecurity assessment results and transform them into actionable, objective data that can be used to drive initiative prioritization, contact one of Kovrr's CRQ experts today or schedule a free demo.
Kovrr financially quantifies cyber risk on demand. Our technology enables decision makers to seamlessly drive actionable cyber risk management decisions.
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