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How can you accurately evaluate the ROI of a cybersecurity solution?

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Cybersecurity is a vital investment for any IT consulting business, but how can you measure its impact and value? Calculating the return on investment (ROI) of a cybersecurity solution can be challenging, but not impossible. In this article, you will learn how to define your goals, costs, benefits, and risks, and how to apply a simple formula to estimate your ROI.

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Udochi O.

Senior Service Engineer, Azure Edge + Platform | Technologist

1 Define your goals

Before evaluating the ROI of a cybersecurity solution, it is essential to define your goals and objectives. Ask yourself what you are trying to achieve with your investment and how you will measure your success. Possible goals include reducing the frequency and severity of cyberattacks, improving compliance with industry standards and regulations, enhancing reputation and trust with clients and partners, increasing productivity and efficiency, and saving time and money on incident response and recovery. When setting SMART goals that align with your business strategy and vision, make sure they are specific, measurable, achievable, relevant, and time-bound.

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Joe William Z.

Information Management Officer, Data Analyst, Data Scientist
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? ROI = (Net Benefits / Total Costs) * 100. ? Establish key performance indicators (KPIs) such as reduced security incidents, cost savings, faster incident response time, and increased threat detection accuracy. ? Establish a baseline before adopting the cybersecurity solution. ? Compute all costs of the cybersecurity solution. ? Determine and define measurable benefits: a. Reduction in the number of security incidents b. Decreased recovery and remediation costs. c. Enhanced employee productivity. ? Recognize intangible advantages: improved brand reputation, customer trust, and business continuity. ? Use Data Analytics and AI/ML to evaluate the cybersecurity solution. ? Use predictive analytics to forecast potential future advantages.

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2 Estimate your costs

The next step is to estimate the total costs of implementing and maintaining your cybersecurity solution. This includes both direct and indirect costs, such as hardware, software, and licensing fees; installation, configuration, and integration costs; training and support costs; staffing and outsourcing costs; maintenance and upgrade costs; and opportunity costs and trade-offs. Additionally, you should consider the potential financial repercussions of not investing in cybersecurity, such as fines, lawsuits, damages, losses, and reputational harm.

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Udochi O.

Senior Service Engineer, Azure Edge + Platform | Technologist
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To get an accurate return on investment of implementing a cyber security solution, you want to develop an asset inventory that is a prioritized list with a value assigned to each of the items. You also need to account for what would be the amount lost if the item were to get stolen, lost, or damaged in a natural or a unnatural situation. Other items to consider are to be the cost of maintaining the infrastructure versus upgrading your infrastructure. With maintaining versus upgrading your infrastructure, you also want to account for the resources you have on hand to maintain such effort, or if you will need to hire onshore versus offshore professionals.

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3 Calculate your benefits

The third step is to calculate the benefits of your cybersecurity solution, which can be both tangible and intangible. These include reduced risk of cyberattacks and data breaches, improved compliance and audit performance, enhanced customer satisfaction and loyalty, increased competitive advantage and market share, improved innovation and agility, and increased revenue and profitability. Additionally, investing in cybersecurity can provide potential incentives, rewards, grants, and tax credits.

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4 Assess your risks

The fourth step is to assess the risks and uncertainties associated with your cybersecurity solution, such as technical issues, human errors, malicious insiders, regulatory changes, market fluctuations, and legal disputes. It is important to consider the risks of overinvesting or underinvesting in cybersecurity, which could lead to wasted resources, missed opportunities, or increased vulnerabilities. Both internal and external factors should be taken into account when assessing the risks associated with your cybersecurity solution.

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5 Apply the ROI formula

The final step in evaluating the return on investment (ROI) of a cybersecurity solution is to apply a simple formula: (Benefits - Costs) / Costs x 100%. For example, if your benefits are $100,000 and your costs are $50,000, your ROI is 100%. This means that you are doubling your investment in cybersecurity. However, it is important to note that this formula is just an approximation and does not account for all the complexities involved in cybersecurity. Other metrics and indicators should also be used to complement the ROI analysis, such as return on risk (ROR), net present value (NPV), internal rate of return (IRR), payback period (PP), and breakeven point (BEP). Evaluating the ROI of a cybersecurity solution is not easy but it is necessary in order to make informed and strategic decisions about investments and optimize outcomes and value.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you accurately evaluate the ROI of a cybersecurity solution?

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1 Define your goals

2 Estimate your costs

3 Calculate your benefits

4 Assess your risks

5 Apply the ROI formula

6 Here’s what else to consider

IT Consulting

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How can you accurately evaluate the ROI of a cybersecurity solution?

1

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4

5

6

1 Define your goals

2 Estimate your costs

3 Calculate your benefits

4 Assess your risks

5 Apply the ROI formula

6 Here’s what else to consider

IT Consulting

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