How to Measure Security ROI?

UM_Maverick asks: "Does anybody out there have any experience measuring Return on Investment for security-related expenditures? For example, if management says that there's $1 million left in the budget, and you can either implement a new customer tracking system that is projected to save $300k per year, or implement a new security technology or process, how do you measure the return on the security spend, and convince them that it's at least worth considering? Googling for 'Measuring Security ROI' seems to just produce a list of articles that say 'Measuring security ROI is difficult.' Does anybody have some more direct experience or information?"

Comments

Risk math

[theonetruekeebler]

Here's a gross oversimplification:

The cost of a security breach is measured as the probability of an incident multiplied by the cost of the incident. Both numbers can be calculated surprisingly well, or at least made to sound plausible. Security software will reduce the probability of an incident. Calculate the difference. If it exceeds the cost implementing security, it's a good thing.

This is a basic formula used for all types of data security, including backup and disaster planning.