ISO 27001 Certification Budgeting: Understanding the Expenses

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What is the financial investment for obtaining ISO 27001 accreditation? The ISO 27001 process, contingent on the dimensions of the organization, may span several years and entail expenditures in the tens of thousands. Here’s our analysis.

Current cybersecurity and regulatory compliance dominate the concerns of contemporary corporate boards, as noted by Gartner. A rising number of enterprises opt for an established security framework, and ISO 27001, recognized globally, stands out as a favored certification framework for many. Remarkably, in 2020 alone, ISO 27001 witnessed a 24.7% surge in worldwide certifications.

Undoubtedly, ISO 27001 holds considerable value, but it does come at a substantial cost. In certain instances, the tangible expenses for the complete three-year certification cycle can accumulate to approximately $75,000, excluding the personnel hours required for the process.

Let’s delve into the breakdown of the expenses involved in achieving certification and explore effective methods to minimize these costs.

Analyzing the Expenses of ISO 27001

ISO 27001 involves a multi-stage process, each stage associated with distinct costs. We will examine the expenses tied to each stage, considering a small startup with 50 employees as a representative example, simplifying the cost evaluation based on company size.

Phase 1: Preparation Phase, $10K—$39K

During the preparatory phase of the certification process, significant groundwork is essential. This stage involves defining the scope of the Information Security Management System (ISMS), pinpointing the locations of sensitive information, executing a risk assessment, and implementing policies and controls to mitigate identified risks.

Tasks in this stage encompass creating a Statement of Applicability (SoA), summarizing implemented controls with justifications for exclusions, and developing a risk treatment plan outlining responses to identified risks. Team training for ISMS support and an internal audit to ensure readiness for external scrutiny are also part of this phase.

Costs for this stage vary widely, ranging from 15,000€ to nearly 30,000€, depending on the chosen approach.

Option 1: Do It Yourself (DIY)

While opting for a DIY route might seem cost-effective initially, considering the actual cost of internal team hours reveals its substantial expense. Calculating the average salary cost of a senior compliance manager, typically leading this stage, at 90,000€ annually, translates to a daily cost of approximately $375€. With the preparation phase spanning three to four months, the total cost of unaided completion by an employee ranges from 22,500€ to 30,000€, making it the priciest option.

Option 2: Platform

Investing in compliance software can further reduce costs. Such platforms offer significant value by automating evidence collection, streamlining workflows, and providing prebuilt templates for policies and procedures.

This can lead to a reduction in the time and the skills required for the readiness stage, but it still requires internal resources. A junior analyst with a salary cost of 40,000€ would work three to four months with a platform priced from 7,000€ to 15,000€, leading to a cost of 17,000€ to 28,000€

Option 3: Managed Certification

Companies providing a Managed Certification scheme eliminate the need of internal resources. Those providers typically make use of a platform as in Option 2 but also manage it, handling the labor-intensive documentation and the internal audit responsibilities. This enables key personnel, such as high-paid engineering leads, to focus on their core responsibilities like product development.

In this case, the total cost is just the provider cost, with solutions ranging from 16,000€ to 22,000€.

Additional cost: Protection Tools

It is important to note that ISO 27001 certification also requires the use of protection tools. Such tools are asset managers, password managers, vulnerability scanners, endpoint protection and SIEM, amongst others.

If not already deployed, these must be installed prior to the audit. It may amount to a total of 15,000 to 50,000€ per year, depending on the number of employees, network assets, cloud resources, etc.

Phase 2: Stage 1 and 2 Audits, 4K€—6K€

The audit-certification process involves two primary stages: the documentation audit (Stage 1) and the certification audit (Stage 2). Securing an auditor for these stages typically costs between 4,000€ and 6,000€ for a small startup.

Auditor costs vary on the size of the company and the reputation of the chosen auditor. Opting for a Big Four firm may come with a premium, providing certification from a high-profile, highly respected entity. The extra cost could be justified if the prestige of the Big Four holds weight with the CEO or if customers prefer the credibility associated with a Big Four auditor.

Phase 3: Surveillance and Recertification Audits, 7K€—$10K

Upon successful completion of the certification audit, the company attains full ISO 27001 certification. However, to sustain certification, annual surveillance audits in the first two years and a recertification audit in the third year are mandatory.

Surveillance audits are less exhaustive than initial audits, usually costing between €1,500 and 2,000€ each. The recertification audit, being as detailed as the original certification audit, incurs a similar cost.

Compilation of Expenses

The cost of ISO 27001 certification is subject to various variables. Beyond company size and ISMS scope, the decision to engage a consultant, adopt a compliance platform, or pursue a DIY approach significantly influences the overall cost. The chart below provides a summary of these considerations.”

Start-up with 50 employees Option 1:
DIY
Option 2: Platform Option 3:
Managed Certification
Readiness stage 22,500€ to 30,000€ 17,000€ to 28,000€ 16,000€ to 22,000€
Protection tools (if not already deployed) 20,000€ to 35,000€
Certification audit
(year 1)
4,000€ to 6,000€
Surveillance audits
(year 2 and 3)
1,500€ to 2,000€
Recertification audit (year 4) 4000€ to 6,000€
Total (w/o protection tools) 33,500€ to 46,000€ 28,000€ to 44,000€ 27,000€ to 38,000€
Total cost of ISO 27001 for a 50-employees startup

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