What is a Monte Carlo Simulation?

A Monte Carlo simulation is a computational technique used to model the uncertainty and variability in a system by running multiple simulations with randomly generated inputs. This risk analysis method uses random sampling methods to calculate possible outcomes and probabilities in complex systems or processes.

In the context of cyber risk quantification, Monte Carlo simulations are valuable for assessing the potential impact of various risk factors on project schedules, financial forecasts, or other decision-making processes. By running thousands or even millions of iterations, Monte Carlo simulations provide a range of possible outcomes and probabilities, helping decision-makers make informed choices and better understand the uncertainties inherent in their plans or investments.

Monte Carlo simulations are leveraged in the FAIR framework to aid in quantifying cyber risk in financial terms.

See Also: 

• FAIR Cyber Risk Quantification
• NIST SP 800-30

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