Guide for an effective Cybersecurity budget for startups

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As an organization, especially smaller ones, the primary focus is towards growing towards a stable business to achieve consistent cashflow. In such a scenario, it is completely understandable why cybersecurity is not a priority for them. As a consultant myself, I find it tough to justify the exorbitant charges that cybersecurity professionals or organizations quote to provide their services. From a small business owner’s perspective, it is important to note that their first priority is to look for the best value for any expense they incur, and cybersecurity is an expense.

It is not common practice to assign a valuation to their cybersecurity need and evaluate the potential ROI (Return on Investment), which is why a framework for developing an effective cybersecurity budget is crucial for startups. Without a structured approach and allocating financial resources effectively, startups have faced a multitude of cybersecurity concerns which cause massive financial and reputational damage, often resulting in irreparable losses. In light of the frequent data breaches, organizations of all sizes must prepare to fortify their defenses to prevent them from becoming a victim to such attacks. At the same time, it is important to note that cybersecurity is a continuous exercise, and it is impossible to achieve 100% security from cyber-attacks, irrespective of how much money we throw at it. Thus, the best that an organization can hope for is to continuously evaluate their current posture and achieve incremental improvements with each cybersecurity budget.

In this article, I outline my views on the essential characteristics of an effective cybersecurity budget and propose a process flow especially for startups to obtain insights on how they can develop an effective cybersecurity budget.

Characteristics of an Effective Cybersecurity budget

An effective cybersecurity budget should be comprehensive, adaptable, and strategically aligned with the organization’s overall goals. These are the key characteristics:

1. It should be strongly aligned to the overall financials of an organization.
2. It should have adequate coverage for cybersecurity functions with risk-based & compliance-driven allocations.
3. It should be scalable and flexible, allowing for adjustments in response to emerging threats and changing business needs.
4. It should have governance & oversight mechanisms, with metric-driven analysis and regular reporting to organizational leadership.
5. It should allocate resources to incident response & recovery planning.
6. It should incorporate cybersecurity insurance to mitigate financial losses from potential breaches.

Based on my experience, there are three key pillars of an effective cybersecurity budget:

By incorporating the essential characteristics around the key pillars, organizations should be able to achieve a holistic approach in developing a cybersecurity budget that mitigates their cybersecurity risks, supports compliance, and enhances overall security resilience.

Process Flow for Establishing a Cybersecurity Budget

I acknowledge that financial limitations are a reality for most startups, which is why it is vital for them to adopt a structured approach to efficiently allocate resources on developing an effective cybersecurity budget. For organizations without a cybersecurity budget or those who want to identify and improve their cybersecurity budget, they can adopt the following approach in its entirety or utilize the steps they feel are essential for them.

Step 1: Determine Objectives

The first step in this process is to identify the desired outcomes we hope to achieve with a cybersecurity budget. Taking a cue from the introduction, data breaches and regulatory fines are a great motivator for organizations to begin thinking of cybersecurity as an ESSENTIAL expense instead of an OPTIONAL one. These objectives should be clearly documented and aligned with the state of the organization’s performance for the cybersecurity leaders to obtain buy-in from the organizational leadership.

Step 2: List All Cybersecurity Functions

Once the objectives are clearly defined, we need to define all the cybersecurity functions that are needed for an organization’s cybersecurity division to function effectively. This enables a cybersecurity leader to lay out the entire cybersecurity landscape for the organization. To achieve this, there are various established standards that can be utilized, but my preference is utilizing NIST CSF. The NIST Cybersecurity Framework provides a structured approach to managing cybersecurity risk. It consists of five core functions: Identify, Protect, Detect, Respond, and Recover. These functions guide organizations in assessing and improving their cybersecurity posture, emphasizing risk management, resilience, and alignment with business needs and regulations.

Step 3: Obtain Insights on Current Security Posture

After establishing the organization’s cybersecurity landscape, we need to assess if there already are existing mechanisms and procedures in place that could perhaps be leveraged for our purpose. To achieve this, it’s important to evaluate the current cybersecurity posture of the organization. This exercise provides valuable information to a cybersecurity leader that they can utilize to develop a roadmap for an effective cybersecurity budget. Conducting a posture evaluation using established standards such as NIST CSF is an excellent method to obtain specific insights on the gaps or missing mechanisms which can then serve as an objective for the cybersecurity budget.

An additional exercise to map the insights to the key pillars of People, Process, & Technology would be incredibly useful for a cybersecurity leader to define clear actionable outcomes for the cybersecurity budget.

Step 4: Assign Priority & Monetary Allocation to each Cybersecurity Function

Once the organization’s cybersecurity functions are mapped out and existing resources are determined, we need to conduct a prioritization exercise to rank each cybersecurity function based on its criticality and sensitivity in the enterprise’s landscape. Now, as a cybersecurity consultant, I would treat all functions with equal weightage, but the primary responsibility of a cybersecurity leader is to effectively allocate the limited resources they have to achieve an optimal outcome with the constraints. Hence, I would acknowledge the prioritization exercise as an essential exercise for the cybersecurity budget, which would enable an organization to allocate financial resources in an efficient manner.

Step 5: Establish a Phased Approach to Implement the Cybersecurity Functions

Upon prioritization, it becomes imperative to define a structured approach towards implementing the cybersecurity functions. In my view, this differs across organizations depending on their size and financial resources. Startups generally have an uncertain financial base to work with, especially if a large part of their resources comes from investor backing rather than various revenue streams and diligent financial management. For larger organizations, their financial management is more streamlined and predictable through extensive historical data, which is why there isn’t a one-size-fits-all approach. A cybersecurity leader has to properly assess the organizational constraints and determine the optimal outcomes to achieve through the cybersecurity budget. To achieve that, I see two broad approaches that can be followed:

• Invest majorly in high priority cybersecurity functions: This would lead to higher maturity in certain functions, but lead to other functions lagging in maturity. The priorities can then be shuffled in subsequent cybersecurity budgets to balance it out later.
• Invest equally in all cybersecurity functions: This would lead to concurrent improvements across the board, but the maturity growth rate would be slower.

Both approaches, in my view, are equally sound and applicable depending on the organizational context.

Step 6: Prepare the Annual Cybersecurity Budget

This is the final step of the process in which we would take the output from the previous steps and leverage that to develop a holistic cybersecurity budget to present to the organizational leadership. A cybersecurity leader needs to clearly understand the organization’s financial context to be able to know how much resources they can actually obtain to fulfill the budget goals. To obtain such insights, extensive collaboration between the organizational leadership is required to view cybersecurity as an essential expense and allocate resources effectively. For an effective cybersecurity budget, a detailed document should be created to provide granular information on the proposed allocations for each cybersecurity function and the expected outcomes (with associated metrics) they hope to achieve through the budget. This document would then drive the annual cybersecurity strategy for the organization.

Conclusion

In conclusion, creating an effective cybersecurity budget is an extremely challenging endeavor, especially for startups. However, with a structured approach as outlined in the article, it is indeed possible for organizations to achieve their cybersecurity goals. All organizations should understand the key characteristics of an effective cybersecurity budget and work towards improving their cybersecurity maturity, because cybersecurity is not optional anymore, but a Need.

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