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When it comes to managing cybersecurity risk, it is no secret that the volume and complexity of threats businesses are facing continue to increase exponentially. Particularly in the past few years, the mass migration of operations to the cloud and the growth of AI have presented new challenges and new opportunities for businesses, as Crowdstrike highlights in their 2024 Global Threat Report.
With this, the need for investment in cybersecurity has increased in parallel and for some cybersecurity software solutions, this has presented an opportunity. While businesses scramble to amp up their defences, they have nurtured a culture of fear-mongering, presenting their solution as the silver bullet you need in your cybersecurity roadmap. As an increasing number of businesses take this approach, there is a secondary risk for businesses that lies in the boardroom instead of the server room: Spiraling budgets and requests for investment.
As key business stakeholders are becoming more aware of this pattern, they are growing increasingly sceptical about cybersecurity investments. They want to know exactly where the budget is going, what it’s going to deliver for the business and what the ROI on their investment is going to be. This presents a challenge for CISOs. How do you decide which threats you are going to prioritize, secure the budget to mitigate them and communicate the impact you’re having to wider management? That’s where effective cyber risk prioritization comes into play.
In this article, we cover: what we mean by cyber risk prioritization, how to quantify risk and the role this plays in prioritization and perhaps most importantly, how you can use this prioritization to communicate with the board and secure investment.
When we talk about cyber risk prioritization, essentially we are referring to the process of quantifying and analyzing cyber risks, deciding in what order you should tackle them and how your budget should be allocated to deliver against your goals most effectively.
In 2023, there was a cyber attack approximately every 39 seconds (up from 44 seconds in 2022) across a broad range of attack types, from DDoS attacks to phishing, malware to supply chains and everything in between. Coupled with this, the IMF April Global Financial Stability Report indicates that the rate of extreme cyber risk losses is increasing as well (currently at $2.5 billion, 4x what it was in 2017).
But what does this mean for businesses and why is it related to cyber risk prioritization? It means that realistically you simply don’t have the time, money or resources to allocate to every potential threat equally. You need to be able to comprehensively understand your business's exposure areas and decide which are most critical to their business and arm your insurance with the rest.
In doing so, not only will you be bolstering your cybersecurity measures where they need it the most, but you’ll be creating a logical, focused strategy that ties in directly with business objectives, helping you to secure budget and buy-in from the board and management and deliver an amplified tangible impact.
We’ve established that you need to prioritize your cybersecurity roadmap according to which threats present the largest risk to your business, but how do you determine what the biggest risks are? There are two main approaches to risk analysis: qualitative and quantitative.
Qualitative risk analysis is the simpler of the two approaches. In a qualitative risk assessment, you identify all the potential risks and rank them either numerically or by color coding based on which are most likely to happen and how significant the impact will be if they do happen.
The challenge with this type of cyber risk analysis is that it presents risk in isolation as a snapshot in time and is essentially based on perceived probability, rather than data. For example, if you rank several risks as level 4 risks (for example) how do you determine which ones to tackle first? While qualitative risk analysis can be effective for smaller businesses, for enterprise companies, it’s not comprehensive enough.
Quantitative risk analysis is far more helpful when it comes to linking cybersecurity threats to financial risk. During a quantitative analysis, you use hard data to determine the cost-benefit of mitigating a specific risk.
For most businesses, quantitative risk analysis is favored, because it allows them to not only determine the impact of risk but also deliver an actionable roadmap to mitigate it.
The most common method of quantitative risk analysis is determining the Annualized Loss Expectancy (ALE e.g. how much this risk would cost you annually if exposed). To determine this, you need to multiply the Single Loss Expectancy (SLE e.g. the cost of a risk being exposed once) by the Annual Rate of Occurrence (ARO e.g how many times a year you expect that risk to be exposed)
To calculate your SLE, you need to multiply your Asset Value (AV) by the Exposure Factor (EF e.g. The impact a threat would have as a percentage.)
EXAMPLE: If an asset's AV was $250,000 and an EF of 5%, the SLE would be $12,500. If this threat to our assets ARO is 2, then the ALE for this threat would be $25,000.
One of the key challenges of quantitative risk analysis can clearly be seen in the example above: it’s complicated. Not only that, but it’s constantly changing as you increase cybersecurity efforts and the value of assets fluctuates.
To effectively feed quantitative risk analysis into your cyber risk prioritization and broader cybersecurity roadmap, you need to be able to keep up with these fluctuations and view them in the context of your broader business strategy.
Manually assessing risk through traditional quantitative analysis frameworks presents a significant limitation in your ability to operationalize your cybersecurity prioritization and consequently your cybersecurity roadmap. Additionally, working with manual risk prioritization processes restricts your business from adopting a holistic view and approach to your wider cybersecurity strategy.
Solutions like X-Analytics allow you to distill this complexity into simple insights, allowing you to make better cyber risk prioritization decisions, which you can then communicate effectively to the board of directors, and senior management, in a context they understand and care about.
Once you have completed your analysis and identified the risks you need to mitigate and the cost associated with not taking action, you need to prioritize these risks in your cybersecurity roadmap. There are a few options on how to do this:
The most effective cyber risk prioritization strategies factor in all of these approaches, in order to develop a roadmap that protects the business, helps meet business goals and is aligned with senior managements and C-Suites key objectives. In reality, getting to this stage requires the right tools. You need to be able to see your entire cybersecurity overview from qualitative analysis, to quantitative analysis to business outcomes in a single platform in order to make the best decisions. You can take a look at how X-Analytics has supported CISOs at leading businesses to do exactly that in our recent case studies.
Boards and C-Suite are averse to investing in things they don’t understand the value of. They’re tired of being asked to fund initiatives that seem to have an infinitely growing cost and no measurable impact.
Through the process of cyber risk prioritization, you’re able to link the technical aspects of cyber risk mitigation with business risk and outcomes - which is what boards really care about - and present a logical roadmap they can understand and buy into.
The reality is that the key impact of cybersecurity for senior management comes down to demonstrating ROI. You need to communicate what the risks are, the impact they will have on the business (in terms they understand and relate to their key focus areas), how much investment and time you need to mitigate it, and how you can demonstrate what progress has been made towards doing this.
To communicate effectively with the board and C-Suite, you need to be able to tie everything together in a concise, simple way, without diving into the nitty gritty technicalities.
Cyber risk prioritization is becoming more and more critical, but analyzing and prioritizing risk in an echo chamber isn’t going to cut it anymore. You need a view of how your prioritization fits into a wider cybersecurity management lifecycle.
In addition to prioritizing your cybersecurity roadmaps for yourself, you need to be able to demonstrate the business impact of risk mitigation and communicate this effectively with the board and wider management from the beginning.
To do this properly, you need a solution that can directly tie your cybersecurity strategy with business success in a way that non-technical management can effortlessly understand.
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