Risk management is in the midst of a “risk renaissance.” Businesses today are almost entirely run on digital platforms—increasing the need for organizations to think more strategically about managing cyber risk. To meet this growing demand, companies need to adopt a different approach to understanding and managing risk. But, how?
Risk quantification allows organizations to identify and communicate risks and threats in monetary terms—helping to make cyber risk part of strategic business decisions. Below are four key benefits of risk quantification:
1. A Common Language
Communicating risk findings so that all stakeholders understand the business implications helps companies align and respond to risk more effectively. Quantitative measurement generates a consistent understanding of what high, medium, and low risks mean and how different threats can impact the company financially. Companies can prioritize and respond to risks and threats more rapidly, becoming more agile and adaptable, with the power to make quick, data-informed risk decisions.
2. A More Objective Approach
Risk quantification presents companies with a more nuanced view of their risk exposure. It moves them beyond broadly informed estimates of their high, medium, and low risks to a more objective risk measurement method that considers the likelihood and impact of any threat. By reducing the subjectivity of risk, risk investments can align more closely with business objectives and risk appetite and allow for more consistency in comparing various business risks.
3. Looking Beyond Cyber
With proper alignment between business functions, risk quantification can be used universally to compare risks and opportunities across different forms of business risk. For example, suppose you have a high risk in your legal department and a significant risk in another part of the business. Between the two risks, it’s hard to understand the relative impact of each on the organization and decide which risk to treat, especially with limited resources. When you present risk findings in monetary terms, you can compare and contrast different risks on an apples-to-apples basis. This lets organizations prioritize the risks they need to pay attention to, align on risk mitigation activities, and respond more effectively to risk.
4. One Tool to Rule
Risk quantification gives you a single tool to measure risk across the organization. Risk quantification measures existing risks and calculates the risk reduction and remaining residual risk after investing in risk controls. Companies can make better-informed risk decisions by knowing the efficiency and ROI of their risk investments.
Putting It All Together
It’s all about a holistic platform and integrated risk management. Without risk quantification, your organization may struggle to effectively evaluate and compare various forms of business risks. But with an integrated risk platform and a comprehensive view of enterprise risks, you have a more consistent foundation with enterprise risk management. Risk quantification allows for uniform definitions and formulas to calculate risk and develop an integrated risk strategy that can be applied holistically across the business.
Risk quantification supports greater cohesion in evaluating various forms of business risk so companies can more confidently reshape business priorities, adapt to evolving markets, and build a competitive advantage. With risk quantification, risk can be consistently measured and resources deployed strategically across the company.