Blog Post
April 2, 2024
TL;DR
Chief information security officers (CISO) or respective organizational cybersecurity leaders are most likely well aware of the cybersecurity risks their organizations face. However, being aware of and communicating important cyber risk management data to the board of directors are two entirely different matters.
Metrics that inherently make sense to someone with a technical background can easily (and often do) sound like a foreign language to a boardroom typically comprised of more generalized high-level business executives. Even if they happen to understand certain concepts, such as the organization’s IT infrastructure, it’s still not enough to drive meaningful collaboration.
After all, effective communication demands that all involved parties be able to speak the same language.
What board members and cybersecurity leaders really need to overcome this obstacle is the ability to translate cybersecurity data into actionable business insights and to understand how cyber incidents can tangibly impact the business.
Now in its third generation, harnessing extensive global intelligence, cyber risk quantification (CRQ) solutions can bring these two parties together, empowering executives to make informed decisions about how to address, mitigate, and transfer these looming cyber risks cost-effectively.
“A good way to convey a message is based on risk. Especially when you are able to quantify that risk, then you bring the discussion into the realm of something they know,” noted Philippe Vuilleumier, Chief Security Officer at telecom company Swisscom and Kovrr Advisor.
While the exact cybersecurity metrics a CISO or cybersecurity may report to the board can - and probably should - vary depending on their organization, the overall goal should be to select data that helps non-technical executives comprehend what cybersecurity risk and its subsequent management means in broader financial and business terms.
Some of the key cybersecurity risk management metrics to consider when reporting to senior stakeholders include:
One of the most important cybersecurity metrics CISOs can report is the organization’s likelihood of experiencing various cyber events and the respective financial exposure. In other words, if the company suffered from a ransomware attack, data breach, or another type of cybersecurity incident, what would the monetary losses amount to?
Cyber risk quantification tools, like Kovrr’s CRQ platform, offer insights into the average loss expectancy according to various cyber events. CISOs can also explore the high and low estimates of financial exposure according to these events, providing board members with more granular insights they can use to make data-driven decisions.
CISOs can also use CRQ to present the probability and potential financial loss metrics of various attack vectors being exploited. These metrics illuminate which entry points into the organization are most likely to be harnessed by cyber attackers. They likewise support cybersecurity risk managers during budget justifications and additional requests for initiatives that address those specific attack vectors.
Additionally, an understanding of the expected financial losses due to digital activities enables decision-makers to determine appropriate risk appetite and tolerance levels, choosing to absorb the cyber risk when necessary or invest in mitigation plans. Having these monetary figures also helps to ensure capital reserves are well-stocked in case of an incident.
As new sensational stories are published almost daily about global corporations falling victim to a cyber attack, it can be easy for senior stakeholders to develop inaccurate ideas about the reality of their organization’s cyber risk posture. However, by harnessing objective data and translating it into a broader business language, CISOs can align expectations, helping them establish high-level, targeted strategies to keep the business cyber resilient.
Demonstrating how the organization's risk posture has progressed over time can also be highly valuable information to communicate, especially if the financial exposure follows a downward trend. Analyzing this decline provides budget-makers with a nuanced understanding of the effectiveness of cybersecurity initiatives and, in turn, their resource allocation choices.
Moreover, the expanded, zoomed-out view can build trust between board members and cybersecurity risk managers, potentially encouraging these higher-level executives to portion out a greater percentage of the budget to the cyber department.
This trust also makes the buy-in process much easier when funds for new cybersecurity tools are requested. Upper management and other non-technical stakeholders can literally see that the CISO is leading the organization on the path toward a more secure environment, bolstering their confidence in the process.
The expenses that accompany a cyber attack are usually spread across multiple different loss components. For example, following a ransomware incident, one typically expects an organization to pay an extortion fee. However, there are other costs to consider, such as compliance penalties and legal expenses. Organizations may also experience a decline in revenue due to reputational harm.
With cyber risk quantification, CISOs can dissect these loss scenarios, evaluating them according to their expected likelihood of occurrence and relative financial damage. This breakdown of cyber risk provides executives with an alternative view of the monetary losses they should expect to incur, likewise allowing them to plan accordingly.
Just as knowing the forecasts of various cyber events, the business impact loss scenarios better equip decision-makers to know if they'd like to invest more in the cybersecurity budget to mitigate the risk or absorb it into their risk appetite levels.
Having the power to translate cyber risk into event and loss scenario likelihoods and respective financial outcomes also means that you can report on cyber investment ROI. Demonstrating return on investment is another way to provide evidence of an investment’s success, fostering further confidence in the cybersecurity program.
Suppose there’s a new cloud security tool that can significantly bolster cyber defenses, but it costs $500 thousand, a price considered expensive for a certain organization. With Kovrr's CRQ solution, CISOs can calculate how much this investment would decrease the organization’s financial loss exposure by more than the initial cost. If it does, it will be much easier to acquire the necessary budget.
In addition to calculating ROI for certain tools, CRQ platforms also equip cybersecurity leaders to calculate the return on investment for security control upgrades according to various cybersecurity frameworks, such as NIST and CIS. Combining these cybersecurity maturity frameworks with CRQ has a slew of other benefits, including prioritization enablement.
ROI metrics regarding upgrades and new tools are figures that board members are more than comfortable discussing, as they understand them very well, making them optimal to report at the next meeting. When considering the audience, ROI becomes the ideal KPI.
While the benefits of working with a third-party service provider are numerous, organizations often forget to include them in their risk analyses, leaving them vulnerable to additional threats. Indeed, evaluating relationships with these providers is a crucial part of understanding an organization’s cyber risk posture and ultimately influences resource allocation.
Certain vendors are more likely to experience a business outage or other interruption, impacting whom the company decides to work with. By assessing them and their respective cyber risk, CISOs can demonstrate that they’ve completed their due diligence and that, given the organization’s needs, they’ve chosen the most optimal provider.
Kovrr’s CRQ platform, in particular, has made significant strides to help cybersecurity risk managers understand their organization’s exposure to cyber risk due to third-party service provider relationships, leveraging key external intelligence to model potential downtime and associated other cyber incidents.
Cyber insurance optimization is another useful piece of information to communicate, as it demonstrates financial awareness and commitment to maximizing resources.
With cyber risk quantification, CISOs and CFOs can compare coverage terms to the forecasted likelihood of experiencing various loss amounts due to cyber activities, equipping them to negotiate for more customized deductibles, limits, and sub-limits and subsequently report these achievements.
With a CRQ platform, CISOs and CFOs can also report benchmarked data regarding how the organization’s insurance terms and conditions stack up against key industry peers. With these insights, board members can better understand how much risk the business is assuming in relation to other entities. Likewise, these comparisons may inspire an exploration of new ways to mitigate excess risk rather than negotiating for better terms.
More generalized peer benchmarks regarding overall cyber risk posture also offer valuable, objective insights that can be leveraged to enhance the organization's cybersecurity program. With such comparisons, it's relatively straightforward to gauge competitive standings and tailor risk mitigation budgets and strategies to align with the most common industry practices.
Objective financial figures are the only universal benchmark companies can harness when comparing their risk to other businesses, so adopting a CRQ is the natural solution.
Indeed, when a CISO uses quantification to transform their company's cyber risk into event likelihoods and financial loss, it's easy to weigh how their risk measures up to peers. Plus, it's an extra way to showcase if the organization is ahead.
Read the Fortune 1000 Cyber Risk Report to learn more about the cyber risk of key peers based on their likelihood of experiencing various cyber events and the resulting financial damage.
The penultimate benefit of cyber risk quantification is transforming the cybersecurity conversation from complex, obfuscated risk metrics to KPIs that can be understood, measured, and subsequently used by high-level executives to plan for the upcoming year.
Approaching cyber risk in the same manner that other operational risks are approached puts all stakeholders, including the CISO, on the same page, allowing risk appetite and tolerance determinations to be a collaborative effort that simultaneously accounts for cyber risk and broader business objectives.
In an era when board members are eager to better understand what’s happening in the cybersecurity department, translating technical metrics into universal corporate terms emerges as the key. Only once everyone is aligned can organizations truly achieve cyber resiliency.
Access our free cybersecurity reporting template, providing specific guidance on which performance metrics to report. Alternatively, contact one of Kovrr’s cyber risk management experts to learn more about how you can leverage CRQ for more effective high-level communication.
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Kovrr financially quantifies cyber risk on demand. Our technology enables decision makers to seamlessly drive actionable cyber risk management decisions.
