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Calculating security ROI is tricky business

By Marcia J. Wilson
July 24, 2003 12:00 PM ET

Computerworld - Return on security investment has become a hot topic.

IT departments have traditionally been viewed as cost centers, though they have learned to provide a business-case analysis for IT initiatives. Information security departments are trying to figure out how to do the same thing.

They can't sell security initiatives based on fear anymore. They have to come up with the same justifications as any other business unit, complete with the dreaded metrics, or hard financial facts.

ROI is about revenue generation, cost savings or increased productivity. IT has learned to show, for instance, that upgrading the server farm or network will provide x% increased productivity by virtue of faster access of mission-critical applications and that installing a virtual private network (VPN) will provide x% increase in productivity by virtue of availability of the network to remote and mobile employees. But how can security prove ROI for preventive measures that require capital expenditures, additional manpower and a steep learning curve?

Some people claim that trying to prove return on security investments is a waste of time. It's all about risk management, they say. Meanwhile, security vendors are champing at the bit to prove that ROI on security is possible and have gone to elaborate lengths to prove that their products will provide significant returns. Managed security service providers are saying, "Just let us handle your security for you, and we'll show you how you can reduce risk and cost."

Opinion ColumnMarcia Wilson

You know you need firewalls, VPNs, a secure network architecture, encryption, digital signatures, improved backup and restore capability, filtering, monitoring, intrusion detection/prevention and single sign-on capabilities. How are you going to justify the expenditures?

What are you trying to protect?

Here are some steps to take when trying to calculate ROI:

  • Identify your information assets: Assets can be a resource, a product, the networked computing infrastructure, protected health information, or customer or employee data. Losses in the areas of confidentiality, integrity or availability can have a specific dollar value or be intangible, as with loss of reputation.

  • Identify threats and vulnerabilities: Anything that causes an unwanted outcome is a threat. Threats come in many forms and have varied effects. Earthquakes are threats. Lawsuits are threats. Vulnerabilities are weaknesses or the absence of adequate safeguards.

  • Do an asset valuation: Once you've identified your assets and the threats and vulnerabilities that beset them, it's important to go through an asset valuation process. Why go full throttle on a project to secure an asset that isn't of high value to the organization? You can create a matrix and value your assets simply in terms of high, medium and low value to the organization based on your own definitions. For each asset, consider what the total cost, initial and ongoing, is to the organization for the full life cycle of the asset. Determine what the value of the asset is in terms of production, R&D and criticality to the business model (tangibles and intangibles). Answer the question of what the value of the asset is in the marketplace including intellectual property rights.

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