What does Secondary Loss Magnitude (SLM) indicate?

Secondary Loss Magnitude (SLM) specifically indicates the amount of secondary losses that are likely to occur as a result of an incident. In risk management, particularly under the Open FAIR framework, secondary losses are those losses that are not immediate but occur due to the primary loss. For example, if a financial institution experiences a data breach (the primary loss), the secondary losses could include loss of customer trust, regulatory fines, and long-term damage to the company’s reputation.

Understanding SLM is crucial for organizations as it helps them assess not just the immediate impacts of a security incident but also the longer-term repercussions that may stem from it. This holistic view is important for effective risk management and for making informed decisions about risk mitigation strategies. It highlights the need for organizations to consider both immediate and potential future losses in their overall risk assessment.