Measuring your cybersecurity’s return on investment

Measuring your cybersecurity’s return on investment

In today’s business landscape, cybersecurity is a primary concern for any company. Even small- and medium-sized businesses (SMBs) need to protect their sensitive data from a wide range of cyberthreats such as phishing and ransomware. Investing in cybersecurity is therefore no longer simply an option but a necessity to ensure a company’s long-term viability.

However, cybersecurity investments can be expensive, especially for SMBs that have limited financial resources. That’s why it’s important to be able to measure the return on investment (ROI) of your cybersecurity efforts. By knowing the ROI of every cybersecurity investment you make, you can maximize your expenditure and prioritize solutions that give the best value for your money.

Three approaches to measure your ROI

While there is no single formula for measuring a cybersecurity’s ROI, you can use any of the following approaches to have a good idea of whether your cybersecurity investments are worth it.

1. The net benefits formula

Using the net benefits formula, ROI can be computed by dividing the net benefit by the cost of investment, then multiplying the quotient by 100. This can be expressed as:

ROI = (net benefit / cost of investment) x 100

Here, ‘benefit’ pertains to the approximate value of money you save by preventing losses from cyberattacks. When measuring total benefits, make sure to quantify both the direct and indirect benefits, such as reduced breach-related costs, retained customer trust, and positive brand reputation. To compute the net benefit, subtract the total costs associated with the benefits (e.g., personnel and regulatory costs) from the total benefit.

Meanwhile, to compute the cost of investment, add all the money you spent on cybersecurity, including money spent on hardware, software, training, consulting, and maintenance.

By quantifying all your costs and benefits, you will be able to assess if you are getting the most value from your cybersecurity investments.

2. The data breach approach

Cybersecurity ROI can also be computed by first calculating the cost of a data breach and then comparing that amount against the cost of your cybersecurity investments.

To figure out how much a data breach could cost your business, you need to take the following factors into account:

  • The costs incurred when handling the breach, including money spent on investigating the incident, informing affected customers, and recovering lost or damaged data;
  • The fines and penalties imposed by regulators; and
  • The business your organization lost and the harm done to your reputation.

Once you've tallied the total cost of a data breach, you can compare it to the expenses you've incurred trying to prevent a breach from happening. If what you’d lose in a data breach costs more than your total cybersecurity investments, your cybersecurity efforts are giving you positive ROI and are worth keeping.

3. The metric tracking approach

Another way to measure the ROI of your cybersecurity investments is to track the following metrics before and after implementing specific solutions:

  • The number and severity of cyber incidents;
  • The amount of time and resources spent on detection and response;
  • The degree of adherence with regulations and standards; and
  • Customer satisfaction and retention rates.

Monitoring these metrics helps you pinpoint where your cybersecurity investments are working well and where you might need to invest more.

Essential tips for measuring your ROI

Some businesses focus on more quantifiable benefits, such as the actual costs of preventing a breach, while others focus on subjective metrics, such as customer trust. To understand which cybersecurity ROI strategy works best for your organization, do the following:

Set clear objectives

What are your cybersecurity goals? Do you want to decrease cyber incidents, enhance your compliance status, or boost your reputation and customer trust? Once you identify your objectives, you can identify the right formula to track your advancement.

Use a range of metrics

No single metric can provide a full picture of your cybersecurity’s ROI. Using a variety of metrics gives you a more comprehensive view. Based on your objectives, you need to gather and analyze relevant data, which could include anything from annual revenue, compliance costs, number of security incidents, and recovery time.

Monitor your progress over time

To check if your cybersecurity investments are delivering the desired results, keep an eye on your progress as time goes on. This will make it easier to spot areas where adjustments are needed, such as if you’re overspending on end-user solutions but are skimping on compliance requirements.

Keeping your IT system safe and secure can be a daunting task. Why not leave your company’s cybersecurity in the hands of our experts at USWired? We provide world-class IT solutions and services to businesses in San Jose, CA and the greater San Francisco Bay Area. If you want an IT investment that delivers great bang for your buck, contact us today.


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