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NIST NICE S0850 CompTIA Security+ 5.2 NIST NICE S0858
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Find the Balance Point

Spend too little and customers leave; spend too much and you waste money. Find the spending level with the lowest total cost.

⚑ Complete this interactive to capture a CTF flag worth 5 points.

About this interactive

The lesson's SaaS company loses customers when its service goes down. A little downtime is forgiven; more drives users away, and the revenue lost climbs. Spending on mitigation (load balancers, failover, RAID, redundancy) drives downtime down. The first dollars fix the obvious problems and buy a big improvement. Later dollars buy less and less: each extra nine of uptime, from 99% to 99.9% to 99.999%, costs far more than the last. That is diminishing returns. So there are two costs at every spending level: the mitigation you pay for, and the revenue you still lose. Spend nothing and lost revenue is huge. Spend a fortune and you have paid for protection you did not need. Add the two together. The optimal investment point is the spending level where the total is lowest. In a table of options: total = spend + lost revenue, and pick the smallest. The video describes the balance point as where the two costs are about equal. That is not the rule: the lowest total can fall where spending and lost revenue are quite different, and the point where they are equal can cost more. Always compare the totals. A quick check for any extra step of spending: does it cut lost revenue by more than it costs? If yes, it pays for itself.

What you'll learn

Aligned to

NIST NICE
S0850 Skill in performing cost/benefit analysis
S0858 Skill in performing economic analysis
CompTIA Security+
5.2 Explain elements of the risk management process

Key terms

Cost-Benefit Analysis
A financial evaluation method that compares the costs of implementing a solution against the benefits it produces to support decision-making.
Optimal Investment Point
The point in a cost-benefit analysis where the combined total of mitigation spending and revenue loss from downtime is at its lowest.
Mitigation Cost
The financial investment required to reduce or prevent service downtime, including redundancy, failover systems, and high availability measures.
Availability
The assurance that systems and data are accessible and operational when needed by authorized users.
Redundancy
The duplication of critical components or systems to increase reliability and availability.

Topics

Risk Management Risk Analysis Interactive Calculation

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