Understanding the cybersecurity risk formula is a practical way to reduce your small or medium-sized business’s cyber risk. The core risk formula, asset value, the Factor Analysis of Information Risk, and the Common Vulnerability Scoring System (CVSS) are all part of the risk assessment process.
Cybersecurity is vital for small and medium-sized businesses (SMBs) because they are often attacked due to their smaller size. The risk of financial loss, operational risk, reputational damage, and even legal trouble from cyber threats is a huge concern for businesses.
Cyber criminals look for vulnerabilities they can manipulate for their benefit, like weak passwords, unpatched software, or human error. These criminals are then able to gain access to sensitive customer data, disrupt services, or apply ransomware and cause a host of other problems for the small business.
The potential consequences for not implementing a cybersecurity program are great. Having a greater comprehension of the risk formula helps SMBs fortify their defenses and continue to grow amidst the growing number of cyber attacks.
Core Risk Formulas in Cyber Security
The most popular risk formula is Risk = Threat x Vulnerability x Impact.This formula is used as a part of risk assessments to show the amount of danger an enterprise faces regarding cyber risk. This cyber risk is calculated by combining the likelihood and impact of a threat breaking through a vulnerability with the severity of the impact.
The security threat refers to the likelihood or commonness of a breach. This is based on threat intelligence and criminal activity understanding.
Vulnerability includes the measurable outcomes of at-risk systems, applications, and process weaknesses.
Impact measures the likelihood and impact of damage from cyber threats. This damage includes business problems, financial impact, reputation, and legal fees incurred after a cybercrime.
This formula is used for risk assessments in many organizations.
Some businesses employ other in-depth formulas that use financial metrics for calculating risk. Factor Analysis of Information Risk (FAIR) calculates risk in monetary terms to help businesses prepare financially. This formula is: Risk = Loss Event Frequency x Loss Magnitude.
These cyber risk formulas help businesses prioritize risks, plan for financial losses, and implement mitigation efforts. Business owners who are not sure how to get started should seek out strategic advice from an experienced IT managed service provider.
Cyber Risk of Asset Value
Asset value must be known in order to understand the true impact of your organization’s cyber risk. Small and medium-sized business asset risk calculation should include sensitive data points, critical assets, and potential downtime financial costs.
Asset value risk assessments will determine impact, inform your decision-making, and help you prioritize risks.
- Determine Impact: Higher value cyber risk assets contribute to higher risk scores when faced with threats.
- Supports Quality Decision Making: Assigning value to your business’s assets aids in explaining and securing security investments.
- Prioritize Risks: SMBs should focus their efforts on high-priority assets that are critical for business operations. The higher the priority, the bigger the overall risk if a breach occurs. Focus efforts on aspects of critical operations, financials, and compliance assets.
Implement asset value into the cyber risk analysis for a more complete, cost-effective cybersecurity risk management strategy. There are several common errors business owners make when valuing their company. These errors include fast evaluations, owner unpreparedness, cash flow calculation errors, and a lack of due diligence.
Common Vulnerability Scoring System
The Common Vulnerability Scoring System (CVSS) is a quantitative risk assessment for rating the severity of security vulnerabilities within a business’s computing system. CVSS rates the organization’s vulnerability severity by assigning a score from 0.0 to 10.0 to each vulnerability. The higher the score, the greater the vulnerability. All vulnerability scores are then organized into levels:
- None (0.0)
- Lower risk (0.1 – 3.9)
- Medium (4.0 – 6.9)
- High priority risks (7.0 – 8.9)
- Critical cyber risk (9.0 – 10.0)
CVSS works by evaluating risks using three metric groups: base, temporal, and environmental metric groups.
- Base Metrics: The base metrics risk analysis measures characteristics like attack vector and complexity, required privileges, user interaction, impact, and scope on confidentiality, integrity, and availability (CIA triad).
- Temporal Metrics: Report confidence, code maturity, and remediation levels are used to show changes over time.
- Environmental Metrics: These metrics give businesses a way to adjust scores based on their specific field or environment. This may include asset criticality, existing controls, or mitigations.
The Common Vulnerability Scoring System does have some noteworthy limitations. A critical score on a non-critical system may not actually pose a high threat to a company. In the same way, a critical score does not necessarily equate real-world exploitability. Scores are also fixed and rarely change, even if the threat landscape changes in the future.
Businesses usually overcome the shortcomings of CVSS by combining the scores with threat intelligence, using risk-based prioritizing tools, and active reevaluations. CVSS is a powerful part of the risk matrix formula, but it should be used alongside other tools to prioritize risks.
Small Businesses Often Fail When Calculating Risk
Most small businesses fail when calculating cyber risk. This results in poor outcomes after a cyber attack.
- SMBs believe they are too small to be targeted.
- SMBs underestimate their data value and the impact of cyber attacks.
- SMBs have a false sense of security from basic tools.
- SMBs have a lack of quality proactive cyber risk planning.
- SMBs don’t realize they may have supply chain and third-party exposure risks.
One of the major benefits of managed security services is their cybersecurity expertise. IT professionals help small businesses take an accurate inventory of their cyber risk scores, potentially saving them thousands in overall financial loss.
FAQ
Which tools automate risk assessments using the risk formula?
There are several leading platforms to choose from, including Cynomi, Apptega, CyberSaint, Vanta, ControlMap, and LogicGate Risk Cloud.
How can small businesses prioritize risks when the likelihood and impact are unknown?
Small businesses should use qualitative risk metrics that have defined scales, use the FAIR model with ranges, as well as automation and real-time data to help them prioritize risks more accurately.
Making Cyber Risk Analysis Actionable
Understanding the cyber risk formula is essential for the growth and security of small and medium-sized businesses. Being able to use a quantitative risk assessment for your enterprise is a huge first step to scale while prioritizing your unique cyber risk.
Combine your threat likelihood and impact with your vulnerability severity to find your risk score. Be sure to implement your asset values for more precise financial calculations and greater decision-making abilities. Use the CVSS framework to prioritize risks alongside threat intelligence, active reevaluations, and professional security teams to fit your enterprise with the best, most up-to-date armor against modern cybercrime.
