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Determining the relative reduction in risk with the FAIR model – used by the RiskLens cyber risk quantification software – requires that you:
In this case, the baseline risk scenario involved a database breach of PII records by a cyber criminal, where data was stored in plain text.
The below report depicts the high-level results of the organization’s data breach risk analysis. The current state in blue depicts the organization’s average loss exposure (risk) on an annualized basis given the current estimations of frequency and magnitude (10+M records) of the breach event. The magnitude of the loss assumes that the data left the organization in plain text. The green bar depicts the anticipated loss exposure in the event that key PII fields were to be tokenized. The impact is a $134M reduction in loss exposure; a powerful figure that can be compared against the cost of the investment to make an informed business decision.
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Setting Up the Risk Analysis
When assessing the amount of risk associated with a breach of sensitive data belonging to customers (a common type of risk analysis we help financial services organizations conduct), the organization is likely to experience what is referred to in the FAIR model as Secondary Loss. Secondary Loss is any loss that materializes as a result of negative reactions from external stakeholders.
I’ve often reflected control enhancements such as encryption or tokenization in the model by adjusting the Secondary Loss Event Frequency (SLEF) factor, which is the percentage of times that you expect to experience a fallout due to secondary stakeholders. SLEF is a great way to quickly model the impact of a fallout from secondary stakeholders. However, there may be times where your SLEF may change for various loss types at a different degree.
Circling back to the example I cited above, the organization was only planning to implement tokenization on the most sensitive fields in the database cluster (e.g., Social Security number and Taxpayer Identification Number), while leaving the remaining fields such as name, address, and phone number (phone-book type information) unmasked.
In this instance, changing the SLEF would not be the most accurate indicator of the change in fallout resulting from secondary stakeholders, as certain elements of secondary loss may slightly reduce while others may be eliminated altogether.
Therefore, we modeled this change by directly altering the magnitude of the various types of secondary loss. We created a new version (or copy) of the Loss Tables within the RiskLens platform and adjusting the values based how the loss would materialize in the event that SSN and Tax ID were tokenized.
The benefit of manipulating the Secondary Loss Event Magnitude (SLM) values vs. changing the Secondary Loss Event Frequency (SLEF) is that you are able to isolate the degree at which the various types of loss are expected to materialize as a result of a fallout from secondary stakeholders.
Modeling the Reduction in Risk
Below is an example of how we modeled the reduction in risk from implementing tokenization using Secondary Loss Magnitude:
Loss Types with Significant Decrease in Loss Magnitude
When discussing the impact, we noted that the following items would substantially be reduced to an immaterial amount as a result of implementing tokenization on SSN and Tax ID:
Values for the above types of loss were set to zero (or a very small number) to reflect certain types of loss that would likely not materialize as a result of tokenizing SSN.
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Loss Types with Slight Decrease in Loss Magnitude
Contrary to the above items, the remaining costs associated with secondary response would still apply when phone book data is exfiltrated in plain text; although not to the degree if all fields (including SSN and Tax ID) were not tokenized:
Takeaways for Future Risk Analyses
Modeling the change in risk by directly changing the magnitude of various types of Secondary Loss is particularly beneficial when aiming for a better degree of precision, such as when the analysis is being used to make investment decisions. Using SLEF may still be fine when performing quick and dirty analyses (to prioritize risks) or when the different types of secondary loss will be impacted to the same degree. This exercise is just one of the many examples of the flexibility of the FAIR model. All it takes is the ability to think critically when presented with a given risk scenario.
Related:
4 Powerful Ways to Use the RiskLens Cyber Risk Quantification Platform