Qualitative vs Quantitative: Methods of Cyber Risk Analysis
Is one more effective than the other?
According to the World Economic Forum’s Global Risks Report 2023, cybersecurity risks rank as part of the top 10 most severe global risks, for both the immediate future and the long haul. Cyber-attacks continue to surge, with reports observing more than a two-fold increase in attacks impacting both large organizations and SMEs, across industries. Cloud assets too are increasingly at risk as more businesses operate within the cloud environment.
Businesses must navigate this double-edged sword and formulate effective strategies to mitigate cyber risks before they become costly breaches. By understanding their current security posture, existing vulnerabilities and the relevant strategies against an ever-evolving threat landscape organizations can create a well-defined cyber risk methodology that pinpoints critical assets and their significance to the business and assess the resilience of existing security measures.
There are two main cyber risk analysis methodologies that businesses can employ: Qualitative risk analysis and Quantitative risk analysis, otherwise known as Cyber Risk Quantification (CRQ). What are the differences and is one more effective than the other?
First, let’s compare the core principles of each approach -
Next, what characterizes each approach?
What are you getting out of each approach?
Despite differences in approach, Qualitative and Quantitative risk analysis both contribute to the overarching goal of effective risk management, offering unique perspectives.
Qualitative risk analysis enables a broad assessment of cyber risk scenarios relevant to an organization’s specific business processes, security posture, and threat landscape. During this process, the wider impact of risk is considered, facilitating a broader understanding of cybersecurity issues across different business perspectives. Through expert judgment and descriptive scales, organizations can identify risks that warrant further investigation and the security controls that mitigate them.
Cyber Risk Quantification (CRQ) injects greater objectivity by leveraging historical data and statistical techniques, refining the view of cyber risk by discerning which high-severity risks pose the greatest threat to the business.
With the rising global impact of cyber threats, CRQ also imparts an increasingly important and relevant dimension to assessing cyber risk. It assigns a financial value to potential losses associated with risk scenarios, translating risk into estimated business cost. This addresses the uncertainty inherent in qualitative analysis.
As each approach has its inherent challenges and demands different levels of resources and expertise, it is crucial for organizations to understand their specific business context and cyber risk management goals before deciding the approach to take. Organizations may also choose to combine both approaches to manage their cyber risks more effectively in an increasingly complex threat landscape.