Analyze Material Events With On-Demand Financial Quantification

Kovrr’s scalable cyber risk quantification platform, equipped with the innovative Materiality Analysis feature, illuminates baseline material losses in the wake of a cyber event. It arm organizations with data-driven insights for the materiality determination process and ensures compliance with disclosure regulations.

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Industry Recognition

Why Define Materiality?

Within the evolving regulatory landscape, and especially given the recent US, EU, and Australian cybersecurity rulings, assessing, identifying, managing, and disclosing "material" cyber events and risks in a timely manner has never been more critical.

However, determining what constitutes "material" impact is a complex process. The US SEC, for instance, defines it by the "substantial likelihood that a reasonable investor would attach importance" it. This ambiguous nature has consequently created numerous challenges for organizations.

Nevertheless, by establishing clearly defined, organizational-specific parameters for classifying material risks and events, stakeholders are not only provided with a defensible framework to ensure compliance but they are also equipped to develop cost-effective cyber mitigation strategies that prioritize the most significant risks. 

Determining Cyber Materiality With Kovrr

Given every organization's unique nature, it would be limiting for any governing body to formally instate a concrete, rigid definition of material. Indeed, factors such as industry, revenue, and geographic locations will shape internal materiality thresholds.

Still, by providing the necessary, tangible data regarding the company's material cyber risk landscape to the C-suite, boardroom members, and other key executives, CISOs can significantly aid organizations in their materiality determination process.

Finding the right information to share, however, can be tricky.

That’s where Kovrr can assist.

4 Steps to Effectively Define, Manage, and Disclose Material Cyber Events and Risks

Kovrr's risk experts conducted a comprehensive analysis of corporations worldwide across various industries and concluded that the best practices for determining materiality begin with a basis point of revenue. Incorporating this baseline, Kovrr’s models evaluate millions of real-world cyber event data points, including external global threats and insurance loss intelligence, along with an organization's unique cybersecurity posture, to produce unbiased, highly calibrated risk and materiality analysis.

Once equipped with this objective data, corporations can easily visualize what constitutes a material loss, making the risk and governance reporting disclosures more straightforward. As such, Kovrr has devised a concise 4-step process to aid organizations in assessing their unique material cyber risks and formulating a robust, practical, and defensible risk management plan.

step 1

Cyber Event Materiality Criteria Establishment

While Kovrr’s Materiality Analysis leverages a base revenue point, the CRQ feature also incorporates an organization’s respective criteria for determining materiality in regards to its unique business objectives and enriches it by further assessing the following parameters: 

  • Risk tolerance

  • Risk threshold

  • Risk appetite

  • Financial impact

  • Insurance deductibles

  • Brand consequences

  • Data sensitivity levels

  • Operational interruptions

  • Legal repercussions

  • Event longevity

step 2

Stakeholder Identification and Engagement

Kovrr's platform brings together the key stakeholders that will be directly involved in evaluating and determining a cyber event's - potential or experienced - materiality. This group generally includes: 

  • C-suite executives

  • Boardroom members

  • CISOs and security teams

  • Internal compliance personnel

  • Legal consultants

persons in office meeting

Kovrr also strategically fosters collaboration with these key parties during the establishment of materiality criteria. Cooperation among stakeholders is crucial for accurate, valuable, and transparent cybersecurity risk management, strategy, governance, and incident disclosures.

step 3

Risk Quantification and Materiality Analysis

Kovrr employs advanced simulation models and an extensive event catalog to identify an organization's likely cyber events. Simultaneously, our Materiality Analysis automatically plots the base revenue and other extreme event points on a loss curve to highlight the organization's most significant, most material risks in combination with the likelihood of experiencing that type of event.

  • Top risks

  • Event likelihood

  • Event severity

  • Event types

  • Attack vectors

Our models leverage these materiality thresholds and other significant criteria provided by key stakeholders in Step 1 and Step 2 to compute the probabilities of an organization experiencing a financial loss, data record loss, or outage time of that amount.

step 4

Continuous, On-Demand Cyber Risk Assessment

Kovrr's on-demand cyber risk quantification platform, equipped with the novel Materiality Analysis, ensures organizations can evaluate their cyber risk and determine which are likely to meet materiality thresholds, rendering them suitable and applicable for regulatory disclosures.

Our risk models constantly evolve, adapting to and accounting for the latest cyber threat data and trends.

Regularly conducted risk simulations keep an organization informed of new material risks that might arise, creating substantial time to disclose incidents and develop robust management strategies.

Stay Aware. Stay Prepared.

The latest cybersecurity regulations make it all the more critical for organizations worldwide to implement high-level processes to remain aware of potentially material cyber events. Don’t wait until after an incident has occurred to establish these instrumental procedures.

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