Explore cybersecurity risk quantification’s importance in assessing breaches’ financial impact. Discover how assigning numbers to cyber risks can help you allocate your budget, optimize insurance decisions, and facilitate data-driven discussions at the board level. By learning how to quantify your cyber risk, you can ensure your organization prioritizes security investments.
In brief:
- Use cybersecurity risk quantification (putting real dollars on cyberthreats) to transform vague red-yellow-green risk assessments into concrete budget justifications — like proving a $12,500 firewall investment makes sense against an $850,000 breach cost.
- Make smarter insurance decisions with hard numbers. When you know data recovery costs over $6,000 in overtime, that $3,000 cyber policy becomes an obvious win.
- Improve board conversations by comparing cyber risks to other enterprise threats with measurable financial impact data.
- Start by identifying key assets — like customer data, intellectual property (IP), and proprietary systems — and calculating what each threat scenario would actually cost your bottom line.
Cybersecurity risk quantification is the process of assessing the financial impact of breaches and other cyber incidents. It transforms vague threat assessments into hard financial data that drives smarter business decisions.
This means more than simply identifying potential risk events. Risk quantification assigns numbers to incidents. In this way, your risk is both measurable and more tangible. While some businesses may use red-yellow-green risk scales, these are often too vague to be actionable. By quantifying cyber risk with numbers, you pave the way for prioritizing security investments.
Let’s say you’re considering buying a $50,000 cybersecurity tool to prevent breaches. How do you know whether it’s worth it?
Or suppose you’re about to dive headlong into what appears to be a lucrative merger deal. However, the other company is concerned that your cyber risks may undermine the value of the deal. How do you reassure them?
You also enable your organization to budget more effectively. Since you’re clarifying the financial impact of risk events, this makes deciding how much to spend on cyber defenses far more straightforward.
Here’s a breakdown of the benefits of quantifying cyber risk exposure, how to do it, and some common tools and frameworks successful organizations use.
3 Ways Quantifying Cyber Risk Exposure Informs Your Business
In a data-first business environment, numbers are worth their weight in gold. When you put a price tag on cyberthreats, you give decision-makers powerful data. With quantified risks in hand, you eliminate the “How much might this cost?” guessing game.
This is especially important when it comes to allocating your budget, optimizing insurance coverage, and informing board-level decisions.
1. Better Budget Allocation
Quantifying cybersecurity risk gives you convincing numbers that make it easier to build reliable budgets.
To illustrate, suppose you work for an organization that uses a customer relationship management (CRM) tool to store client data. Using cybersecurity risk quantification, you determine that a breach would cost a total of $850,000. This includes the cost of:
- Hiring security experts to investigate and perform forensic and root cause analysis
- Shutting down compromised systems and the resulting downtime
- Removing malware and patching vulnerabilities
- Recovering affected systems, including enterprise resource planning (ERP) systems or other impacted software
- Legal fees associated with reducing the impact of litigation from customers
- Notifying the public through a series of press releases and updates
- Investing in new security tools, such as multifactor authentication and intrusion detection systems
While the list could go on, these are some of the most common line items.
When it comes time to build a budget around purchasing new cybersecurity tools, the $850,000 figure is invaluable.
For instance, you may consider segmenting your network by placing your CRM behind a next-generation firewall (NGFW). You also plan to segment other areas of your network, including your development environment, payment processing system, a guest network for visitors, and a virtual private network (VPN).
Say each NGFW costs $2,500, which includes installation. Since you need five of them, you’re looking at an investment of $12,500. At first glance, sticker shock could deter decision-makers from approving the NGFW purchase. However, in the context of the $850,000 fallout that network segmentation could prevent, the $12,500 could provide a more than adequate return on investment.
2. Smarter Insurance Coverage
Can you quantify cyber risk in a way that informs your insurance decisions? Definitely.
Even the most experienced insurance company doesn’t fully understand the intricacies of your digital environment, let alone the cost of security incidents. Cybersecurity risk quantification empowers you with numbers. You can then use these to decide which kinds of coverage to invest in.
For instance, suppose you are quoted a cost of $3,000 for a cyber policy that covers liability issues arising from a breach and the cost of recovering lost data. Let’s say you have a two-week recovery time and a team of three IT people working on the job, each doing 10 hours of overtime per week. According to data from ADP, the amount of overtime you’d have to pay your team to recover lost data would easily add up to more than $6,000 in a typical breach scenario. Paying $3,000 for a cyber policy now seems like a no-brainer.
3. More Data-Driven Board-Level Conversations
Modern boardroom conversations are as data-dependent as department meetings. By quantifying cyber risk, you give your board solid numbers they can use to make crucial decisions around a variety of issues, such as:
- How cyber risks compare with other enterprise risks, such as supply chain disruptions or new competitors entering your market
- Optimizing spending around mitigating the most impactful risks, as opposed to those whose financial impact may pale in comparison to others
- Building an overarching crisis preparedness plan — you bring information technology (IT) to the crisis prep table when you provide dependable risk quantification data
It can be tempting to simply allocate what feels like a solid budget number toward cybersecurity. However, even if the numbers work out, you still preclude the opportunity to provide others, such as board members, with valuable data they can use to guide your organization.
These factors combined provide the “why” of cyber risk quantification. The next step is to nail down the “how.”
How to Quantify Your Cyber Risk
Quantifying cyber risk differs from quantifying other types of risk, such as natural disasters or employee turnover. The assets involved have finite values. However, there are also some pitfalls.
For instance, the medium- and long-term cybersecurity impacts can be harder to quantify because some of the numbers may seem theoretical, such as those associated with reputational damage.
Another common pitfall is undervaluing risk. It’s easy to miss a few risks or to underestimate the impact of certain incidents.
The headlines are packed with examples, such as U.K. retailer Marks & Spencer (M&S), which got hit with a ransomware attack in April 2025. M&S estimates the attack will cut the company’s 2025 profits by around £300 million (over $400 million).
As the M&S attack demonstrates, there’s a lot at stake when quantifying your cyber risk. Here’s how to make the process easier and more accurate:
- Identify key assets. In addition to computers, networks, and software, you’ll want to include customer data and IP. Proprietary secrets also have value.
- Factor in reputational damage. For some organizations, reputational damage with customers is the most critical concern. For others, their reputation with investors is a stronger concern.
- Figure out which threats can impact each asset. For example, a customer information database could be susceptible to an encryption-ransomware attack. Or an asset connected to a VPN may be more vulnerable to an insider attack.
- Estimate the financial impact of an attack. Make a list of the effects of an attack and the dollar figure associated with each. Recovering data, rebuilding systems, paying cybersecurity professionals, and improving defenses may be at the top of your list. At the same time, increased insurance premiums and the effect on stock prices could also be factors.
- Use probability to gauge the likelihood of each incident. Historical data from similar companies in your industry may be helpful here. You can also consult with cyber risk professionals. They better understand which attacks are likely to impact your industry or network environment.
- Rank and prioritize threats. For some organizations, ranking and prioritizing threats are very straightforward: the higher the impact and probability, the higher the rank and priority. You can also multiply the impact by the likelihood, which may yield similar results. In some cases, it may be more effective to prioritize risks based on the number of customers they affect or the number of employees they inconvenience.
The quantification process may take some patience, both with yourself and people you need information from, but it’s worth it. By following the steps above, you can scaffold and simplify your cyber risk quantification. That being said, certain tools can further enhance the process’s efficiency.
Tools and Frameworks for Cybersecurity Risk Quantification
You don’t have to build your risk quantification system from scratch because there are tried-and-true tools and frameworks that others have found effective. Two common ones are:
- Factor Analysis of Information Risk (FAIR) Model. FAIR breaks down risk based on its most fundamental components. It considers different risk scenarios, risk factors, and the magnitude of loss associated with each situation.
- Risk Quantification Platforms. Risk quantification platforms aggregate risk data for you. They also automatically calculate your risk and produce easy-to-understand reports.
When choosing the best risk quantification platform, you should consider some pros and cons. On the plus side, these solutions help you make objective decisions, prioritize risks, and justify cybersecurity investments. On the other hand, these platforms can be complex, and it may take some time to gain the expertise needed to maximize their benefits.
When to Bring in Outside Expertise
You should bring in outside expertise if your organization is new to cyber risk quantification.
In addition, if you have a relatively complex digital ecosystem, outside experts can save you a lot of time and effort. You may not have the personnel power to execute a comprehensive cyber risk quantification, at least without diverting personnel from their other tasks. If so, enlisting outside expertise can keep the staff in your organization focused on their current work.
Even if your company has the staff to perform a cyber risk quantification, hiring outside experts is still often a good move. They can provide you with crucial guidance on how to perform the quantification. Experts can also train your internal staff and equip them with the skills necessary to quantify each risk accurately.
Ultimately, your cybersecurity risk quantification process is about empowering you. You arm your teams with valuable data to guide your organization’s next steps.
Quantify Your Cybersecurity Risk to Empower a More Effective Strategy
To start quantifying your cybersecurity risk today, you can:
- Collect internal data, specifically around past incidents and the most vulnerable systems in your organization.
- Let stakeholders in your financial and legal teams know about your quantification endeavor. It’s important that everyone understands that cybersecurity is a C-level concern, so it necessitates buy-in across multiple departments.
- Reach out to other companies to see what they’ve done to produce reliable cybersecurity risk quantifications.
- Start small and work your way up. Instead of tackling your entire cyber risk portfolio at once, you can quantify one or two relatively simple risks, preferably using FAIR or another framework. Then, progressively quantify more complex risks.
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Centric Consulting simplifies the cyber risk quantification process by giving you seasoned experts who understand the most effective ways to assign dollar values to cyber incidents. Whether you need to justify a budget expenditure or prepare for an audit, Centric’s customized guidance and techniques can save you time and funds. Connect with us today to learn more.
