Many security leaders still rely on vague terms to communicate and manage cyber risk, which can leave executives and board members uninformed and ill-prepared to manage organizational risk effectively. With the rise of newly adopted U.S. Securities and Exchange Commission (SEC) regulations, publicly traded companies are under increasing pressure to improve their cybersecurity programs and disclose cyberattacks and material information about their cybersecurity risk management, strategy and governance.
Cyber risk quantification (CRQ) has emerged as the most effective way to maximize cyber risk management programs by translating cyber risk into specific financial impacts. According to Forrester Research, CRQ will revolutionize the way that security leaders engage with boards and executives to discuss cybersecurity.
The need for effective cybersecurity reporting to executives and boards of directors has become critical in today’s world. Many cybersecurity reports are filled with technical details that hinder executives from making well-informed decisions and accurately assessing the cybersecurity risk landscape. By operationalizing CRQ, security leaders can provide executive-level reporting that communicates the financial impacts of cyberattacks targeting vital business assets, leading to disruptions in operations, system outages, and reduced production and recovery costs.
CRQ also provides a way for security executives to optimize security spend by adding objectivity to the decision-making process and prioritizing spending based on financial risk reduction and maximizing return on investment (ROI). Understanding the organization’s financial risk exposure allows security leaders to focus on areas with the most significant risk reduction opportunities and prioritize security initiatives that align with the business to better mitigate the most significant risks facing the business.
To provide decision-makers with an overall organizational risk profile, cyber risk must be fully integrated into the overall enterprise risk management (ERM) program. CRQ is becoming a best practice among leading organizations to develop and operate effective risk management programs, re-vamp risk scoring, and integrate ERM procedures. By reporting risks in terms of business impact and financial exposure, CRQ removes the subjective interpretations that rely on nominal scales or color codes.
As companies continue to mature their cyber risk capabilities by adopting CRQ, they should consider incorporating CRQ into other risk functions and work towards adopting an integrated risk management operating model. This allows for better analytics to identify and track trends across lines of business or functional areas, as well as systemic risks to the organization.
Whether organizations are trying to stay ahead of regulations, reacting to a cyber event, or being proactive, adopting CRQ can help improve cybersecurity reporting, optimize budgets, create risk-based security roadmaps, prioritize vulnerabilities, and enhance ERM. Organizations can take simple steps to integrate CRQ into business processes that drive actionable results.
For those interested in learning more, they can contact Randall Spusta at IBM or Cary Wise at ThreatConnect for assistance in operationalizing CRQ for their organization. Additionally, they can watch the on-demand webinar for a deeper dive into real-world CRQ use cases.
In conclusion, organizations can greatly benefit from adopting CRQ as a way to effectively manage cyber risk, provide executive-level reporting, optimize security spend, and integrate cyber risk into the overall risk management program. By replacing vague terms with specific financial impacts, organizations can make well-informed, risk-based and financially responsible decisions when it comes to risk.