How Cyber and IT Risk Quantification Tools are Evolving for the Digital Age

Cybercrime has reached new heights over the last five years, especially during the COVID-19 pandemic. This is made evident by the costly security breaches in big corporations that have made the news over the years. 

Cybercriminals managed to get millions of dollars as ransom from these businesses using time-tested tactics like social engineering, phishing, and other hacker tools.  

In turn, these cybercrime events fueled the cybersecurity industry as organizations started to invest millions of dollars in protecting their data. Unfortunately, organizations invested in security systems that weren't good enough in a rush to find quick cybersecurity solutions.

However, to implement an effective and practical cybersecurity strategy, organizations need to realize the types of risks their data could face in the future. Risk assessments can help organizations set up an adequate level of security for every application and data. 

Legacy GRC Vs. IRM

GRC (Governance, Risk, and Compliance) is an outdated risk management process that hardly holds any relevance at this point. But organizations still use it to create security solutions that are too expensive and too complicated to scale up for large organizations. Besides being difficult, they didn't solve the problems that a risk management system should be solving.

Organizations and key business partners, outsourced entities, and suppliers need a more inclusive insight into their business units and compliance and risk functions to improve risk readiness. IRM is one of the risk management systems that emerged from the need for a more collaborative nature for managing risk within an organization and outside it. 

The following table will define the fundamental differences between legacy IRM and GRC technology solutions. The characteristics and implementation of legacy GRC technology seem limited to addressing the growing risks across an evolving digital business.

Here are some essential differences between GRC and IRM: 

IRM Is The Future

Governments have created regulations for risk management systems out of societal pressure. But, unfortunately, these regulations have also compelled organizations to make bad decisions just to tick boxes. 

While executives believed that these compliances were going to save them, the reality is that they restricted the choices of regulators. Instead of directing the processes toward increased efficiency, these regulations forced organizations to invest cost and time into nothing.

Unfortunately, GRC legacy systems aren't efficient in helping modern enterprises assess risks. The information they get from GRC is too siloed, so the solutions are modular and impede communication between data. 

Legacy GRC technology products are highly compliance-driven and fragmented. As a result, it is nearly impossible to obtain the views required to manage today's interconnected state of business operations.

On the other hand, the IRM solutions offer vertically integrated risk. IRM offers you a range of solutions that give you insights from an organization's strategy to its business operations and enabling technology assets. Solutions range from single-vendor to purpose-built applications for quantitative risk analysis.

The integrated risk management solutions offer eight primary use-case domains that you can't achieve with GRC are: 

1. Digital risk
2. Vendor/third-party risk
3. Quality risk
4. Business continuity
5. Internal audit
6. Environment, health, and safety (EH&S) —
7. Ethics and compliance
8. Legal risk

Moreover, some attributes that are unique to IRM are as follows: 

• Strategy: An integrated approach enables and implements the framework, including improvement in performance through effective risk ownership and governance
• Response: IRM identifies and implements mechanisms that mitigate the risk
• Assessment: Organizations can identify, evaluate, prioritize, and quantify risk through IRM 
• Communication and reporting: IRM provides the finest and most appropriate means of tracking and informing stakeholders of the risk response for an enterprise
• Technology: IRM solution architecture can be designed and implemented while using it
• Monitoring: Organizations can identify and implement processes that methodically track compliance with policies, risk ownership/accountability, governance objectives, and decisions that require governance processes to be set up, control, and mitigate the effects of risk and any risks to those objectives

Risk Quantification And Business Decisions – The Connection

Risk Quantification is an evaluation process of identifying risks during a defined time frame. It develops data that in turn helps organizations to make informed decisions. 

There are new kinds of threats arising almost every day, putting organizations' data under threat. They are especially attacking autonomous machines, internet-connected products, and automated business processes. So, stakeholders have to make risky decisions every day, and a single step in the wrong direction can incur high project costs upwards of millions of dollars to organizations.

Organizations need to develop a solid understanding of the impact of these risks on privacy, product security, IT risk, and cybersecurity to make informed decisions using risk analysis. Risk quantification helps them do that by thoroughly evaluating the cybersecurity risk of an organization. 

Once security teams identify risks, stakeholders estimate a potential loss amount and frequency that helps create a statistical model, like a risk matrix. Using it, stakeholders consider the probability of possible financial loss.

Risk quantification tools attempt to mitigate or eliminate the loss possibility as the return on investment proxy when assessing cybersecurity projects. It ranks assessment practices, investments in tighter controls, and risk management tools by potential exposure. 

When comparing two projects in terms of risks, the one that mitigates more potential exposure will be ranked on top of the one that mitigates lower potential exposure. This helps organizations to make informed business decisions that ensure higher revenue.

Once-A-Year Assessments Are No Longer Enough 

The vulnerabilities of IT security are dynamic. They don't stay the same throughout the year. So, a risk assessment carried out once a year will find vulnerabilities only around that time. However, while they carry out the assessments, more risks arise that go unaccounted for. Hence, these assessments become quickly outdated and are very subjective depending on the form.

Organizations usually are hit by the urgency to prepare for a risk assessment of securing systems at a certain point in time. Hence, they evaluate existing documentation to meet specific audit requirements or compliance. Unfortunately, this means the assessment will only reflect a more stringent security behavior situation than the one that might be a norm at the organization, which means that unaccounted risks will continue to exist the rest of the time. 

Hence, organizations looking into more efficient improvements in cybersecurity must gain command over their security posture and third-party security posture through non-intrusive and continuous monitoring. Yearly or quarterly assessments are no longer enough because they leave networks unshielded when attacks happen. 

Asking The Right Questions To Enhance Security

The secret for companies to keep operating safely in this digital age of cybercrimes is to know what questions they need to address. However, before they can address these questions, they need to know what the questions could be. Only then will they be able to provide timely and efficient solutions. 

Security teams need to learn how a system is hacked and how security controls work to get smarter cybersecurity. Understanding this will give security teams an idea about how much protection they need to defend their system against threats. 

Following are some of the common questions organizations usually ask and their limitations.

Any organization that relies on these questions to guide its decisions is primed to make bad choices regarding its investments and priorities in cybersecurity. Moreover, they only give the organization false hope that everything will be ok. 

Moving Forward

The purpose of a security program is never to guard the organization against threats entirely and keep it safe because that has become nearly impossible in this digital age. However, organizations can create a security program that balances the need for a security system with the need to keep the business running. To ensure that, you need risk management software that accurately measures threats and helps organizations stay prepared. Risk quantification tools and techniques provide clear insights to support informed decision-making within the enterprise.

To learn more about risk quantification tools, check out our webinar Why Your Risk Quantification Method Limits Your Board’s Understanding of Cyber.