What Is Cyber Risk Quantification?

Organizations will likely experience at least one cyberattack in their lifespan, regardless of their size or industry. Cyber risk quantification has emerged as a way to accurately identify threats, reducing the chances of attack success. Here’s what it is and why businesses should choose it over risk assessments.

The Definition of Cyber Risk Quantification

Cyber risk quantification is the process of using quantitative measurements to calculate an organization's vulnerability to cyber threats. Multiple frameworks exist, each aiming to align business objectives with cybersecurity strategies.

The most basic way information technology (IT) professionals can find risk is by multiplying the percentage chance a cybersecurity incident will occur by its potential financial impact. The risk quantification approach takes things a step further by applying specialized frameworks.

Examples of Cyber Risk Quantification Frameworks

These cyber risk quantification frameworks are some of the most common.

NIST SP 800-53

NIST SP 800-53 is a catalog of security and privacy controls released by the United States National Institute of Standards and Technology (NIST). It measures cyber threats by severity to help companies prioritize them and protect information systems.

ISO 27005

ISO 27005, published by the International Organization for Standardization (ISO), is a guide for performing information security risk assessments. It applies to companies of all sizes and has been reissued multiple times, so it is a common cyber risk quantification framework.

The FAIR Model

The nonprofit FAIR Institute published the Factor Analysis of Information Risk (FAIR) model. This probability-based model uses a mathematical algorithm to measure risk monetarily and quantitatively. While it’s practical, it requires a tremendous amount of information.

How It Differs From Standard Risk Assessments

A standard risk assessment categorizes systems, data, or networks as low, medium, or high risk. This process can be content-, context- or user-based, meaning an IT decision-maker assigns labels based on what something contains, the circumstances in which it’s used or how they feel about it. It often leans toward qualitative or dynamic findings.

While standard risk assessments are effective, they aren’t always enough. How do IT teams prioritize security controls when multiple assets are medium risk? What happens when higher-ups arbitrarily decide a low-risk system takes priority over a high-risk one? Sometimes, objective, quantitative measurements are crucial.

Cyber risk quantification uses mathematical formulas, logical flow charts, or quantitative metrics to calculate risk, differentiating it from the standard approach. It identifies the likelihood of cyberattacks and how much an organization can lose if affected by one, making its findings more rational and data-driven.

Why Choose It Over Plain Risk Assessments?

Decision-makers should consider cyber risk quantification over similar alternatives because cyberattacks are increasing in frequency and severity — they can’t afford inaccurate assessments. While cybercriminals' techniques already grow increasingly sophisticated daily, recent advances in automation technology have accelerated their progress dramatically.

Soon, cyberattacks may become too costly for firms to handle, forcing them to close or make budget cuts. Experts predict cybercrime-related losses will hit $13.82 trillion by 2028, up from $8.15 trillion in 2023 — a 69.94% increase in under a decade. Upper management will likely expect more from cybersecurity teams as the stakes rise.

Increased spending is another cause for heightened scrutiny. About69% of IT leaders expect their cybersecurity budgets to grow 10%-100% by the end of 2024. Therefore, it’s safe to assume most teams will face pressure from higher-ups who want to see a correlation between budget expansions and diminishing cyber risk.

The Benefits of Cyber Risk Quantification

The most significant benefit of cyber risk quantification is improved threat prioritization. IT teams with an objective, data-driven overview based on probability know precisely what assets to prioritize and where to direct resources. Moreover, they gain a business-specific understanding of which cyber threats are relevant.

Consequently, decision-makers have an easier time allocating resources and determining IT budgets. This way, teams don’t have to worry about pinching pennies defending high-risk systems. Eventually, this may lead to a surplus, enabling professionals to repurpose unused funds for more important duties.

Objective, data-driven information is easily understandable — even to those without IT backgrounds. Team leaders can use cyber risk quantification to enhance communication between them and executives, making it easier to secure board buy-in on issues like funding, threat prioritization, and incident response decisions.

How to Get Started With Cyber Risk Quantification

Implementing cyber risk quantification for an organization is a multi-step process.

1. Inventory Physical and Information Assets

An inventory of physical and information assets helps decision-makers determine what to include in their risk quantification. For example, while public data stores may not be considered because they’re easily recoverable, customer relationship management software would be since it houses a tremendous amount of proprietary and personally identifiable information.

2. Collect Data on Systems and Cyberthreats

Companies can only calculate risk if they have enough information to enter into a simulation, algorithm, or mathematical equation. Therefore, data collection, preprocessing, and aggregation are essential to success. IT professionals should ask how cyberattack frequency, attack surfaces, and cybercrime trends could affect their assets.

3. Quantify Risk Internally and Externally

Accuracy increases as specificity does. Unless businesses are small, conducting multiple cyber risk quantification processes is in their best interest. Considering over 98% of companies work with a third-party vendor that’s recently suffered a data breach, separating cyberthreats by whether they originate internally or externally is a great starting point.

4. Present the Findings to Management

Once IT professionals use cyber risk quantification to turn raw data into easily understandable, jargon-free text, charts, or infographics, they should present their findings. Whether their goal is to secure more funding, convey the importance of cyber threats, or argue for risk reprioritization, this step establishes a meaningful, impactful connection between them and executives.

5. Reassess the Organization’s Risk Regularly

The threat landscape constantly evolves, so a single risk quantification won’t stay current for long. IT teams should conduct a new one periodically to ensure their defenses continue to be effective and their insights remain relevant.

Make the Most of Cyber Risk Quantification

As cyberattacks and data breaches become increasingly severe and frequent, the pressure on cybersecurity and IT professionals to identify and defend against cyber threats rapidly increases. Cyber risk quantification is an effective, accurate method to help alleviate some of that strain and help teams defend against the ever-evolving threat landscape.