Why Executive Leaders Need Clear Visibility into Cyber Risk
Executive leaders are expected to make rapid, high-stakes decisions that can directly impact their organization’s security and financial stability. Yet when it comes to cyber risk, these decisions are often made with limited visibility into actual corporate cyber risk. This article provides a high-level overview of how executive leaders can harness the potential of Cyber Risk Quantification (CRQ) within different strategic decision-making use cases.
The risk view tends to narrowly focus on the known, expected risks from a technical cybersecurity, threat and vulnerability view, rather than considering the financial impact cyber incidents have on businesses as a consequence. Too often, the rapidly changing cyber threat landscape the organization is exposed to, is also not included in the equation.
Thereby, traditional risk assessments rely on vague ratings, technical cybersecurity jargon, or heatmaps to estimate the impact on an organization’s cybersecurity and derive the financial impact on single incident or control level; none of which considers the financial consequence business decisions can have on enterprise-wide cyber risk in a constantly changing cyber threat landscape.
Introducing Top-Down Cyber Risk Quantification (CRQ)
Top-down Cyber Risk Quantification (CRQ) changes that. By prioritizing the financial perspective instead of the technical view, CRQ can provide evidence on what impact executive decision-making can have on the organization.
Thereby, the evaluation lies on the business model, organizational processes and value generation chains in organizations to determine where the highest financial impact could occur. In a second step, the evaluation looks at the likelihood of the financial impact taking place, by considering the cyber resilience and cyber security protection implemented.
The entire evaluation is then modelled to generate a full picture of the organization's cyber risk within the current cyber threat landscape.
How Executive Leaders Use CRQ to Drive Strategic Decisions
By translating cyber risk into financial metrics, Squalify enables leaders to strategically assess the business impact their decisions have on the corporate cyber risk.
Whether determining the impact of funding a specific cybersecurity initiative, evaluating the financial cyber implications of a major expansion or M&A activity, or deciding upon a cyber insurance coverage, CRQ enables corporate decisions with a strategic lever and valuable risk insights in terms of financial consequences.
Evaluating Cyber Risk When Entering a New Market
New markets bring new cyber exposures. Be prepared.
New markets offer new opportunities but also entail new cyber risks. When executive leaders decide to expand business into new markets, the cyber risk this change has needs prior evaluation and preparation.
Different data protection regulations, a new legal setting and different cyber threat landscape are only a few factors that will change how exposed a company is to cyber risk. This entails a change in the company’s overall cyber risk profile, encompassing a changed cybersecurity posture and financial cyber loss potential.
Adapting the risk tolerance of cyber risk in financial terms accordingly will allow a better management of cyber risk along with other corporate risks. Additionally, preparing for the change in cyber risk through mitigation measures early on will make the new market entry a success.
Managing Risk During Business Model Shifts
Transformation initiatives can reshape your cyber risk profile.
Shifting the focus of your business, for example by insourcing production into a retail-based business, creates a change in the business model and processes. This has a direct impact on cyber risk, which looks at the most critical digitally driven business processes that entail the highest financial impact.
By integrating production, more complexity and digitally driven working processes are introduced that will affect the current company’s cyber risk profile and financial impact a cyber incident can have.
Similarly, when organizations undergo transformations - like cloud migration, acquisitions, or digital product launches - cyber risk profiles shift. With CRQ, leaders can assess how these changes affect cyber exposure and adjust strategies accordingly. This may include reallocating resources, improving certain cybersecurity controls, or designing mitigation plans tailored to evolving risk.
Using CRQ to Make Smarter Cyber Insurance Decisions
Bridge the protection gap with evidence-backed insurance decisions.
Another strategic business decision executive leaders consider is the cyber insurance buying decision. CRQ helps determine the value of transferring risk versus retaining it.
Through CRQ, this decision can be based on an evaluation of an organization’s specific cyber risk profile and is backed by financial figures of the impact that can be caused by cyber incidents. This comprehensive view on cyber risk in terms of financial consequences, is determining for different cyber insurance decisions.
It allows executives to understand what coverage levels are financially justifiable, what coverage to pick and what deductibles and limits to choose, enabling a better ground of negotiation with insurers.
Turning Cybersecurity Into Strategic Business Discussion
By embedding CRQ into decision-making processes of executive leaders, organizations elevate cybersecurity from a technical silo into strategic business value. Financial language becomes the bridge that connects CISOs, CFOs, and board members to facilitate a shared understanding, faster alignment, and more strategic outcome of their decisions.
Squalify’s CRQ model enables these strategic decisions with a structured, evidence-based model. By combining cyber loss data and expert calibration, it enables a speedy process to financial insights tailored to the needs and decisions of individual organization.
Through its output focus on the consequences of cyber incidents in financial figures, Squalify can show the shift in cyber risk due to strategic decisions in easy-to-understand monetary terms. This gives executive leaders valuable insights, enables effective maneuvering as well as allows to anticipate and mitigate cyber risks.
