The Importance of Assessing & Communicating the Financial Impact of Cyber Risks

The Importance of Assessing & Communicating the Financial Impact of Cyber Risks

 

Just as a captain would navigate their ship across vast oceans, it’s the responsibility of business leaders to determine the direction of the overall corporate strategy. To do this effectively, they need to understand their environment and the conditions that may hinder them along the way. Unfortunately, things aren’t always smooth sailing in real life (even with a plan) so there needs to be room for adjustments and continuity plans in place. It’s not fortune-telling – it’s risk management. 

In this respect, cyber risk is no different from other enterprise risks. They are constantly evolving so cybersecurity teams need to be agile and proactive. But this is easier said than done. Current qualitative assessment methods provide limited value so where should businesses turn? The answer is quantifying cyber risks in financial terms; this provides several key benefits.

With CFOs increasing scrutiny on security spend to find efficiencies, there has never been a more important time to safeguard security budgets. Cyber risks quantification (CRQ) allows businesses to not only justify spending but also demonstrate why it’s important for the business. For example, you’ll be able to demonstrate the impact of a risk occurring with minimal defenses VS the impact of that risk with mitigating controls in place. This enables business leaders to determine whether they are willing to accept, treat or transfer the risk.

On the other hand, it can also help with overspending. In some instances (not often), we’ve seen businesses buy as many cybersecurity solutions as they can afford – in the hope that it will make them safer. Organizations with 50+ solutions in place are rated 8% less able to detect a cyberattack – and 7% lower in their ability to respond – than organizations using less than 50 solutions, as found in this IBM Security Report.  However, this doesn’t guarantee security either… A survey by IDG revealed that 78% lack confidence in their company’s cybersecurity posture, prompting a 91% increase to 2021 budgets. This is where CRQ has significant value – allowing organizations to differentiate between what is vital and what is “nice to have”. 

The Importance of Assessing & Communicating the Financial Impact of Cyber Risks

Secondly, it allows businesses to prioritize the most important controls. This is because they will be able to visualize the impact of implementing controls – making it easier to see where they will get the best bang for their buck. It highlights where you’re likely to see the best ROI.

Finally, CRQ bridges the gap between IT teams and business leaders by providing a common language. Cyber risk should no longer be just a technical conversation – it needs to be understood beyond the IT team. By reducing technical jargon and using objective measurements, it becomes easier to understand what risks actually mean. 

In summary – by transitioning to a quantitative (or even hybrid) approach, you’ll have a better grasp of the conditions of your environment. We’d encourage you to start now – Begin by identifying your main risks and understand what they mean to your business. This is the best way to determine the cyber measures needed to protect your organization in unpredictable environments.

DJ Goldsworthy
About the Author
DJ Goldsworthy

DJ Goldsworthy, CISM, CISSP, CRISC, SSCP, is Vice President and Global Practice Lead, Security Operations and Vulnerability Management at Aflac. He is responsible for driving the strategy for security operations, incident response, threat management, vulnerability management, security administration, application security and security engineering with a focus on global security practices, which include a Red Team based in Northern Ireland and the US, a global SOC operating in the US and Japan, and award winning Threat Intelligence and Enterprise Vulnerability Management programs. For the past two years, Goldsworthy has been focused on securing digital transformation efforts centered on public cloud, DevSecOps and modern adaptive security architectures.