Posted on July 5, 2022.

For people who don’t come from the IT world, cybersecurity often seems like an abstract concept that has little bearing on daily life. However, for companies that have experienced data breaches or cyberattacks, cybersecurity is a very real and important part of regular business strategies.

To help people understand how certain business expenses pay dividends, analysts have developed metrics such as “return on investment” – also known as ROI. According to Investopedia, ROI “compares the gain or loss from an investment relative to its cost.” 

ROI is a popular metric used by stakeholders for such things as measuring the success of ad campaigns, all the way to calculating capital gains in investment scenarios. Luckily, ROI can also be used to justify to your CFO and board members exactly how your security budget is saving you money in the long run.

In this article, Sanity Solutions covers popular ways to calculate cybersecurity ROI. 

Use Software to Know When Firewall is Blocking 

Monitoring attempted hacks on your network is a great way to better appreciate cybersecurity spending. 

In fact, by installing network monitoring software log aggregation that records attempted hacks, you directly see just how much impact your cybersecurity is having. Once you have a clear picture of how many attacks from hackers your firewall detects or blocks in a given timeframe, you can use those metrics to calculate ROI. 

The key to this method is to quantify each attempted hack as a hypothetical successful breach. IBM reports in 2021 the average data breach cost businesses $4.24 million. While it’s rare for even big companies to spend more than $50,000 per year on firewall hardware and upkeep, the financial benefits here are obvious. 

To figure your firewall ROI, pick a timeframe such as one month. Next, subtract your firewall expenses that month from the cost of the hypothetical breaches that occurred in the same time frame. 

Determine the Cost of Lost Business During a Breach  

Determining the cost of business lost during a breach is another solid metric to follow for determining cybersecurity ROI. 

A common business risk overlooked by companies who opt out of cybersecurity investments is the potential amount of business that could be lost after a data breach. However, Security Intelligence website reports that 38% of expenses incurred during a data breach come from “customer churn, downtime and new business acquisition costs.” 

To figure out this cybersecurity ROI metric, you have to determine how many days you would lose if you got hacked. After that, figure out how much money you would lose by having your business down for this period of time. Then calculate how much time you’d need to spend recovering any data loss. Next, calculate how much your cybersecurity program costs you on a daily basis and multiply this expense by the number of days your business is shut down. 

Measuring the total lost business in an attack in a certain time frame against money spent in that period will give you a glimpse into cybersecurity ROI for isolated incidents. 

Calculate the Total Cost of Security Breaches Each Year

To get a more holistic view of cybersecurity ROI, you can combine several metrics to calculate hypothetical lost money vs annual cybersecurity spending. To calculate annual cybersecurity ROI, you must have a robust network that can track all relevant metrics.  

To figure ROI this way, you must figure out how much money in lost revenue your cybersecurity program saved you in the last year. Next, subtract your annual cybersecurity budget from the total money saved in lost revenue. 

The difference between the money you spend on cybersecurity and the money saved by preventing attacks is your cybersecurity ROI. For example, if your cybersecurity program costs $15,000 per year on things like firewalls and encryptions, but it stops $75,000 worth of attacks from happening, your cybersecurity ROI is $60,000. 

Be Proactive with Protecting Your Business from Cyber Threats and Cyber Risk 

Until you have experienced a data breach, cybersecurity often feels like an abstract concept with little real-world value. However, tracking important ROI metrics such as the cost of lost business during a hack quickly illuminates just how important cybersecurity is for protecting your bottom line. 

Even if your budget does not allow for an in-house security team, there are steps you can take to be proactive with your security program. 

  • Create an internal cybersecurity and incident response plan 
  • Identify vulnerabilities with a risk assessment and penetration testing
  • Educate your staff on how to identify phishing scams 

ROI on such things as monthly firewall spending is quite astounding when compared to the cost of a security breach. In fact, just $500 a month on firewall spending could save you millions of dollars in lost revenue with a data breach. 

Contact Sanity Solutions Today!   

If you are unsure of the best way to implement an affordable and effective cybersecurity program, talking to a company like Sanity Solutions is a great first step. We will help ensure you spend your cybersecurity budget wisely. At Sanity Solutions, we know it can be difficult to quantify the monetary value of cybersecurity. Please Contact Us with additional questions about security ROI.