Organizations are growing day by day in different technologies, in this rapidly growing landscape, cybersecurity is much more than just meeting regulatory requirements and having cyber response plans in place with 24/7 monitoring. Beyond security controls and managing security-related activities, it’s about quantifying reported risks to understand the financial impact on businesses and help businesses make effective decisions to reduce risk. The board, management and various stakeholders are looking for quantifiable risk that can be measured and invested in the right place based on the measurable risks reported.
Cyber risk quantification is a model designed primarily to analyze, measure and evaluate identified risks in order to effectively make better business decisions. Integrate the intangible nature of “risk” into tangible business contexts and financial values to prioritize and mitigate identified gaps in the risk platform. Cyber Risk Quantification (CRQ) is the process of assessing the potential financial impact of a particular cyber threat or cyber risk that has occurred in the past or has been reported recently.
Cyber risk quantification uses state-of-the-art robust models to more accurately describe the threats, risks, and highly vulnerable technology risks available in the organization. A scalable approach designed to help organizations proactively assess, measure and quantify the level of emerging/existing risks within the organization. Cyber risk quantification is used to estimate and calculate key financial risk indicators, such as value at risk or expected loss, to help organizations make better decisions and invest in the right set of controls security to protect data.
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Some of the parameters taken into account when quantifying cyber risks include:
- Operational risks
- Risk assessment including RTO, RPO, MTTD, MTTC, etc.
- Time required to mitigate a risk
- Cyber Threat Capability
- Risk exposure and likelihood of identified risks
- Risk mitigation and risk resilience
- Damage cost
Factor Analysis of Information Risk (FAIR) model for cyber risk quantification is one of the main risk methodologies that can help in quantifying risks and reporting them to stakeholders. The FAIR model quantifies cyber risk exposure in monetary value rather than criticality value. The FAIR model helps increase the effectiveness of existing enterprise risk management frameworks and provides a common language to enable the business to understand the potential financial impacts of different cyberattack scenarios and threats in order to make effective decisions. to overcome evolving vulnerabilities.
To support a unified implementation of cyber risk quantification, the FAIR model is developed to fit naturally into the cyber security repositories such as ISO, OCTAVE and NIST to identify the tangible/intangible risks prevailing in the environment and to reduce the risks.
Quantifying cyber risks using the FAIR model
Threats + Vulnerabilities -> Values at Risk
5 best practices for quantifying cyber risks
The most important benefit of cyber risk quantification is the ability to evolve, measure and track progress over time. Some of the recommended best practices when quantifying cyber risks are as follows –
to define – Teams should define the scope, coverage and expectations of cybersecurity efforts which should be calculated and quantified should be well documented to avoid confusion.
b) Establish a goal for performing the CRQ – Teams should be educated and knowledgeable about cybersecurity policies, standards and requirements to align with the context of cyber risk quantification.
c) Risk assessment – Perform risk assessment on an ongoing basis by assigning risk criticality ratings to all critical assets, applications, tools, processes and determining the likelihood of each being impacted by a cyberattack.
d) Documents – Need to document all records and activities involved over time to help the organization make decisions efficiently without gaps.
Focus on the big priorities – It is necessary to categorize the type of risks and focus on cyber threats taking into account the most significant damage to the organization.
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The challenges faced by organizations on the risk side are increasing day by day and the qualitative risk assessments that have been practiced in the majority of places will not be used to quantify risk. Quantitative risk analysis helps organizations determine which risks should be addressed first and which ones need more focus to protect the environment. Organizations need to identify threats that could compromise the security and privacy of assets and data in order to make the right decision to protect the environment and reduce unforeseen financial damage.
Cyber risk quantification enables organizations to activate their cybersecurity posture through a financial lens, justify their cybersecurity investments, improve communication among key stakeholders, and make better decisions related to cybersecurity efforts. mitigation and security investments based on financial impact.
Quantitative cyber risk analysis aims to present risk data accurately and help companies make informed investment decisions in the right place and focus on critical risks in a timely manner to strengthen the protection of data and assets. While thinking about adapting to new methodologies and models to reduce risk in today’s organization, it is also important to eradicate growing risks, reduce complications, look through a financial lens and improve the effectiveness of controls to improve the overall security of the organization.
Opinions expressed by: Kavitha Srinivasulu, Global Head of Cyber Risk and Data Privacy – BFSI R&C, TCS