Cyber Risk Quantification : For informed budget decisions
Wavestone’s Cyber Benchmark 2024 reveals that cyber budgets account for just 6.6% of total IT budgets. This figure underlines the challenge faced by companies in allocating sufficient resources to security while managing other priorities. The low proportion of the budget allocated to cyber security calls for maximum optimization of every euro spent, making the financial quantification of risks even more crucial.
Quantifying risks for informed budget decisions
Managing the cyber budget is a major challenge for CIOs and Executive Committees. The key is to strike a balance between security needs and available resources. This can be difficult, especially in an area where security cannot be compromised. So how do you establish the threshold of acceptability on a limited budget?
Financial quantification: a lever for prioritizing assets to be protected
The financial quantification of cyber risks, or Cyber Risk Quantification (CRQ), is essential. It enables us to map threats and prioritize the assets to be secured. Imagine constructing a building: each room represents a specific expense. To choose the right materials (or security solutions), you need to understand the external context, environmental conditions and structural requirements.
Similarly, knowing your exposure to cyber threats and accurately assessing your risks is crucial, whatever the size of your organization or the budget available.
A new approach with actionable metrics
Traditional risk assessments offer severity indicators, but Cyber Risk Quantification goes further. It offers quantified metrics that can be easily implemented and communicated, particularly to the executive committee. By putting a financial value on risks, decision-making bodies can assess and prioritize them with precision, thus improving budget management.
Return on investment (ROI) in cybersecurity
The financial quantification of risks is transforming the perception of cybersecurity. Organizations are coming out of denial and realizing the importance of quantification. The standard methodology is now tried and tested, although the market regularly suggests new evolutions, making the results consistent and sustainable.
Cyber security is no longer seen simply as a cost, but as an essential investment. Mastering cyber risks demonstrates an organization’s ability to secure and adapt to its environment, thereby strengthening its reliability and competitiveness.
Cybersecurity: an invisible but essential foundation
Cybersecurity is often compared to the foundations of a building. When it’s well done, it’s invisible and easily forgotten. However, if these foundations are poorly designed or inadequate, the impact can be disproportionate. A flaw in cybersecurity can cause significant damage to a company, affecting its reputation, finances and operational continuity.
Paradigm shift
The need to measure and position is becoming paramount for organizations. The ROI approach is essential, especially in times of economic tension. Managing risks with relevant indicators changes the way security is viewed: from a cost, it becomes a strategic investment.
This is how the notion of ROSI (Return On Security Investment) came into being. Despite its similarity in terminology, it is really adapted to security investments and does not correspond to the same formula:
ROSI = (estimated annual losses x mitigation ratio – cost of solutions): cost of solutions
Calculating ROSI can help an organization determine the effectiveness of its solutions, and make the right choices to save time and security.
The importance of the CFO in the cyber risk management process
Involving organizations’ CFOs in the process of managing cyber risks, through quantification, can also be a further catalyst for optimizing budgets.
Firstly, it aligns security and financial objectives. As the CFO has a global vision of the organization, and its finances, collaboration between this department and the ISS will ensure that cybersecurity investments are justified and really contribute to the protection of financial assets. Beyond this, it is the very economic stability of the organization that is concerned, since the CRQ will be able to act as a “stress-test” of the organization’s finances in the face of a range of risk scenarios with potentially consequential economic impacts. Finally, let’s not lose sight of the fact that business processes specific to finance functions can also be impacted by cyber threats (invoicing, third-party payments, etc.), and therefore that raising awareness of cyber risks will be part of both an overall resilience approach for the organization and the general acculturation of strategic and decision-making bodies.
Gartner’s Minimum Effective approach
Gartner proposes an approach called Minimum Effective to rationalize the number of security solutions. This method aims to optimize not only costs, but also the human resources required to implement these solutions. Rather than multiplying the number of tools, the idea is to select those that offer the best return on investment and can be managed efficiently by existing teams.
By streamlining security solutions, companies can reduce operational costs and manpower requirements. This enables resources to be managed more efficiently, while maintaining a high level of security. This approach is particularly useful for organizations with limited budgets, as it maximizes spending efficiency and minimizes redundancies.
Security roadmap and cyber ROI
At Citalid, cyber budget management is integrated right from the start of the risk analysis. During the configuration phase, it is possible to enter the IT budget and the share allocated to cyber security. This approach offers several advantages:
- Prioritization of security projects: With a limited budget, it is crucial to prioritize security projects. This helps to establish a realistic roadmap.
- Identifying budgetary gaps: Understanding the gaps between requirements and actual capacities helps justify additional financial needs.
- Facilitating reporting: By providing a concrete financial dimension, the approach facilitates mutual understanding between technical teams and decision-makers.
- Medium-term management: Integrating the budget into risk analysis enables dynamic management of investments, adapting to changing threats.
Quantifying cyber risks transforms budget management and the perception of security. By providing precise, actionable metrics, it enables informed decision-making, optimizing investments and strengthening the organization’s security. CRQ is more than a method, it’s an essential paradigm shift that places cyber risk on the same level as any other business risk.
