In recent years, cybersecurity has been elevated to a C-suite and board-level concern. This is appropriate given the stakes. Data breaches can have significant impact on a company’s reputation and profits. But, although businesses now consider cyberattacks a business risk, management of cyber risks is still siloed in technology and often not assessed in terms of other business drivers. To properly manage cybersecurity as a business risk, we need to rethink how we define and report on them.
The blog series, “Managing cybersecurity like a business risk,” will dig into how to update the cybersecurity risk definition, reporting, and management to align with business drivers. In today’s post, I’ll talk about why we need to model both opportunities as well as threats when we evaluate cyber risks. In future blogs, I’ll dig into some reporting tools that businesses can use to keep business leaders informed.
Digital transformation brings both opportunities and threats
Technology innovations such as artificial intelligence (AI), the cloud, and the internet of things (IoT) have disrupted many industries. Much of this disruption has been positive for businesses and consumers alike. Organizations can better tailor products and services to targeted segments of the population, and businesses have seized on these opportunities to create new business categories or reinvent old ones.
These same technologies have also introduced new threats. Legacy companies risk losing loyal customers by exploiting new markets. Digital transformation can result in a financial loss if big bets don’t pay off. And of course, as those of us in cybersecurity know well, cybercriminals and other adversaries have exploited the expanded attack surface and the mountains of data we collect.
The threats and opportunities of technology decisions are intertwined, and increasingly they impact not just operations but the core business. Too often decisions about digital transformation are made without evaluating cyber risks. Security is brought in at the very end to protect assets that are exposed. Cyber risks are typically managed from a standpoint of loss aversion without accounting for the possible gains of new opportunities. This approach can result in companies being either too cautious or not cautious enough. To maximize digital transformation opportunities, companies need good information that helps them take calculated risks.
It starts with a SWOT analysis
Threats and opportunities are external forces that may be factors for a company and all its competitors. One way to determine how your company should respond is by also understanding your weaknesses and strengths, which are internal factors.
- Strengths: Characteristics or aspects of the organization or product that give it a competitive edge.
- Weaknesses: Characteristics or aspects of the organization or product that puts it at a disadvantage compared to the competition.
- Opportunities: Market conditions that could be exploited for benefit.
- Threats: Market conditions that could cause damage or harm.
To crystallize these concepts, let’s consider a hypothetical brick and mortar retailer in the U.K. that sells stylish maternity clothes at an affordable price. In Europe, online retail is big business. Companies like ASOS and Zalando are disrupting traditional fashion. If we apply a SWOT analysis to them, it might look something like this.
- Strength: Stylish maternity clothes sold at an affordable price, loyal referral-based clientele.
- Weakness: Only available through brick and mortar stores, lack technology infrastructure to quickly go online, and lack security controls.
- Opportunity: There is a market for these clothes beyond the U.K.
- Threats: Retailers are a target for cyberattacks, customers trends indicate they will shop less frequently at brick and mortar stores in the future.
For this company, there isn’t an obvious choice. The retailer needs to figure out a way to maintain the loyalty of its current customers while preparing for a world where in-person shopping decreases. Ideally the company can use its strengths to overcome its weaknesses and confront threats. For example, the company’s loyal clients that already refer a lot of business could be incented to refer business via online channels to grow business. The company may also recognize that building security controls into an online business from the ground up is critical and take advantage of its steady customer base to buy some time and do it right.
Threat modeling and opportunity modeling paired together can help better define the potential gains and losses of different approaches.
Opportunity and threat modeling
Many cybersecurity professionals are familiar with threat modeling, which essentially poses the following questions, as recommended by the Electronic Frontier Foundation.
- What do you want to protect?
- Who do you want to protect it from?
- How likely is it that you will need to protect it?
- How bad are the consequences if you fail?
- How much trouble are you willing to go through in order to try to prevent those?
But once we’ve begun to consider not just the threats but the opportunities available in each business decision, it becomes clear that this approach misses half the equation. Missed opportunity is a risk that isn’t captured in threat modeling. This is where opportunity modeling becomes valuable. Some of my thinking around opportunity modeling was inspired by a talk by John Sherwood at SABSA, and he suggested the following questions to effectively model opportunity:
- What is the value of the asset you want to protect?
- What is the potential gain of the opportunity?
- How likely is it that the opportunity will be realized?
- How likely is it that a strength be exploited?
This gives us a framework to consider the risk from both a threat and opportunity standpoint. Our hypothetical retailer knows it wants to protect the revenue generated by the current customers and referral model, which is the first question on each model. The other questions help quantify the potential loss if threats materialize and the potential gains of opportunities are realized. The company can use this information to better understand the ratio of risk to reward.
It’s never easy to make big decisions in light of potential risks, but when decisions are informed by considering both the potential gains and potential losses, you can also better define a risk management strategy, including the types of controls you will need to mitigate your risk.
In my next post in the “Managing cybersecurity like a business risk” series, I’ll review some qualitative and quantitative tools you can use to manage risk.
Read more about risk management from SABSA. To learn more about Microsoft security solutions visit our website. In the meantime, bookmark the Security blog to keep up with our expert coverage on security matters. Follow us at @MSFTSecurity for the latest news and updates on cybersecurity.