Cyber Risk Quantification (CRQ): Definition and Best Practices

Cyber risks are more prevalent than ever before for C-level executives and IT security teams. The threat keeps rising, from malware and ransomware to DDoS attacks and zero-day exploits. 

So, how do you decide which threats to address first? Or where should you put your cybersecurity budget? 

By putting cyber risk into straightforward business terms, Cyber Risk Quantification (CRQ) allows businesses to measure and manage their cyber risk. 

In other words, businesses can determine how cyber risk affects potential sales, profit, and other financial performance metrics. 

Importance of Cyber Risk Quantification  

The typical method is to categorize all your risks as high, medium, or low. However, various people will understand these categorizations differently. Although you may believe that a medium risk should be addressed, the management team may argue that it may be tolerated. It can be difficult to defend your position because the word "medium risk" sounds imprecise. 

When you have three or more medium-rated risks, it becomes more difficult. Which one are you going to concentrate on first? Do you devote the same amount of time and resources to each risk? It's difficult to be certain. 

This situation will create problems for decision-makers, security officers, and CXOs (Chief Experience Officer). To become certain in this situation, C-level executives need cyber risk quantification. This will help to achieve more accuracy and clarity in cyber risk assessment by providing a clear picture of what needs to be prioritized. 

According to Senior Director Analyst at Gartner, John A. Wheeler 

“By proactively assessing risk appetite and the value of the desired business outcome, CIOs and CISOs can transform digital risk management into a competitive advantage” 

What Is the FAIR™ Risk Model? 

FAIR™ stands for Factor Analysis of Information Risk.  

FAIR™ is one of the most popular methods to manage cyber risks. In simple terms, it deconstructs risk by identifying and describing the components that makeup risk, as well as their interrelationships. 

The mathematical linkages between each building block or element of risk may be assessed and assigned dollar values, allowing risk to be calculated as financial loss exposure in the end. 

 Further describing FAIR™: 

1. FAIR™ helps in understanding, quantifying, and analyzing the operational and cyber risks in financial terms. 
2. It provides numerical weightage to every metric and presents output in qualitative color charts. 
3. FAIR™ will provide you with a foundation for developing a vigorous approach to risk management. 

Existing risk management frameworks like NIST (National Institute of Standard and Technology), ISO (International organization for standardization), etc. effectively present the security control needed, but they do not provide financial analysis to calculate the potential financial impact of cyber-attacks. 

FAIR™ model has filled this gap by providing financial projections in different cases of cyber-attack which can happen to an organization. Moreover, you can integrate the FAIR™ model with your existing CRQ frameworks like NIST and ISO. 

FAIR™ is developed by no profit FAIR Institute which has more than 12,000 members globally. While NIST has also recognized the FAIR™ model as an “Informative Reference” for risk management and risk assessment in cyber security. 

Best Practices of Cyber Risk Quantification 

Assign criticality ratings 

Assigning a criticality rating to your assets and threats will keep your priorities clear and will reduce the amount of data processing during cyber risk quantification. 

Create risk profiles 

Assess your risks and identify your threats. Create a cyber risk profile from internal and external perspectives. These profiles are important to prioritize the most concerning threat. 

Analyze the controls 

Determine the level of security controls that are already in place. How effective they are, and do they need any modification? This will provide you with a clear picture of what security measures you have taken and what to remain. 

Effective documentation 

Produce effective documentation of every security procedure or process. This will help management and chief officers to decide security budgets and policies. 

Cyber Risk Quantification by Humanize 

Humanize Salience risk quantification is based on FAIR™ Methodology. 

Salience intelligently automates the process of discovering and quantifying the real cyber weaknesses and vulnerabilities on which it correlates regulatory technical requirements and compiles analytical reports. Later, it converts cyber reports to financial risk calculations. 

These financial risk calculations will present the clear security posture of an organization and make the decision-making process easy and smooth for C-suite and the board. 

Request a demo today and see why Salience is the best risk quantification solution for C-level executives.