Cyber Risk Quantification (CRQ)

Cyber Risk Quantification is the process of measuring and expressing cybersecurity risks in numerical, often monetary terms.

Rather than describing risks qualitatively as "high," "medium," or "low," this approach assigns specific dollar values, probabilities, or other metrics to potential cyber threats and their business impacts.

The practice typically involves identifying assets, threats, and vulnerabilities, then calculating potential financial losses from successful attacks. Organizations use various methodologies, including Value at Risk (VaR) models, Monte Carlo simulations, and frameworks like FAIR (Factor Analysis of Information Risk) to estimate costs from data breaches, system downtime, regulatory fines, and reputation damage.

Cyber risk quantification enables more informed decision-making by allowing organizations to compare cybersecurity investments against potential losses in concrete terms. It helps justify security budgets, prioritize risk mitigation efforts, and communicate cyber risks to executive leadership and boards in business language they understand. However, the approach faces challenges including data scarcity, the difficulty of predicting novel attack methods, and the complexity of modeling interconnected systems and cascading failures.