Integration Integration: act on the curve you built in the previous tool.
Bend the Curve

Bend your curve

Your curve says what your risk looks like. It does not say what to do about it. Toggle controls, price the bend, and find the irreducible floorThe annual chance of a loss event that spending cannot remove. underneath it.

A control makes events rarer, or it makes them cheaper, or it moves the loss to somebody else. The space between your curve and the floor is the risk you can still address.

Learning Objectives

By the end, you will be able to:

  1. Explain why a loss exceedance curve never reaches zero.
  2. Separate a control that cuts frequency from one that cuts severity.
  3. Price a control as expected loss removed per dollar spent.
  4. Rank your next purchases and say what the floor leaves behind.

Three curves

Your curve today, your curve after controls, and the floor underneath both.

Baseline After controls Floor, dashed
Ready.

Chart summary updates when the controls change.

How to read this
  • The y-axis is the chance of a loss above the dollar figure on the x-axis, so the left-hand end of a curve is that curve's annual event probability.
  • The floor is a lower bound on how RARE an event can get, not a flat line across every loss size. Its curve is the same simulation run at the floor probability.
  • A rarity control pulls the whole curve down. A severity control pulls the tail in from the right. Cyber insurance flattens the tail at your retention.
  • Expected annual loss is the average loss across all simulated years: the event probability times the average loss when an event occurs.

Six controls

The bend percentages below are illustrative defaults for this exercise, not measured benchmarks. Your own annual cost is the number you actually know, so cost is editable and the bend is not. A retention is the share of each loss you keep before the policy pays.

rarity Cuts event probability by 35%

Seeded at $60,000. Minimum $1.

rarity Cuts event probability by 20%

Seeded at $400,000. Minimum $1.

severity Cuts the upper loss bound by 30%

Seeded at $125,000. Minimum $1.

severity Cuts the upper loss bound by 15%

Seeded at $75,000. Minimum $1.

severity Cuts the upper loss bound by 25%

Seeded at $600,000. Minimum $1.

transfer Caps each retained loss at a $250,000 retention

Seeded at $180,000. Minimum $1.

What the bend is worth

Expected annual loss removed

$0

The bend, in dollars.

Gap to the floor

0%

Percentage points between your event probability and the floor. At zero, no further control can make events rarer.

Event probability after controls

0%

Never below the floor.

Above materiality after controls

0%

Your board's threshold, after the bend.

Expected loss can fall below the floor curve, because the floor caps how often an event happens and not how much it costs.

What to buy next

Every control is priced alone against your baseline: the expected annual loss it removes by itself, divided by what it costs. All six are ranked whether or not you have them selected, because the question is what to buy next.

    Learning Debrief

    What You Just Learned

    • Net annual probability of a loss event after controls: —
    • Probability of a loss above your material threshold after controls: —
    • Expected annual loss after controls: —
    • The bend, and what the floor leaves behind: —

    Applying This to Cyber Risk

    A control is a lever, not a line item. Naming which lever it pulls is what turns a security budget into an argument a board can follow.

    Knowing When to Stop Spending

    Once the curve is near the floor, the next control buys almost nothing. That is the number to bring to a budget conversation, not a colour on a heat map.

    Transfer Instead of Engineering

    Insurance changes no probability and no loss bound. It caps what you keep, which is how you finance the part of the floor you cannot engineer away.

    Bend the Curve is the last tool. Take these four numbers into the capstone, where your table turns them into the ask.

    Go to the capstone Download Playbook