Cyber risks continue to plague companies of all sizes, with the average cost of a data breach hitting more than $4.2 million last year.
It’s a number that definitely makes chief financial officers sit up and take notice. Still, keeping up with cyber risks should already be part of their routine. They map out the company’s financial strategy and plan the budget, and any data threat can throw all of that into disarray.
The same technology that makes the business run more efficiently also increases the risks. Having a CFO that’s educated on those risks helps everyone see data security as a critical investment in keeping your business running.
But not all financial professionals are up on the threat intelligence. Let’s take a look at what cyber risks are and what your CFO needs to know about them.
What Are Cyber Risks?
Any tech your company uses could expose your system to an attack resulting in loss or damage. Cyber threats can mean financial losses and business disruption due to some sort of IT system failure.
The problem can arise from an unintentional action like an employee using an unsecured wifi network to access a company database. It can be from a deliberate or malicious breach like an outside hack. It can even be because of operational factors like not updating antivirus software to catch malware in emails.
Poorly managed systems leave you open to cybercrimes, which can make it impossible for you to function as a business. You can also end up with damage to your reputation, making it likely you’ll lose customers and potential customers.
Even if you have solid software in place, many companies get caught out through operational issues, including:
- Insecure remote access
- Improperly assigned admin rights
- Public building access
- Not updating passwords
- Not reviewing security policies
All of these include the chance an attack can slip through to get at your systems and data. A breach due to negligence like this can put you out of compliance with data privacy and cybersecurity rules. Hefty fines add on to the cost of the attack.
What CFOs Need to Know About Cybersecurity
Because the CFO controls the purse strings, it’s critical they have the right mindset about security spending. They should think about cybersecurity as the operational tech needed to run the business rather than IT overhead. Purchases of inventory tracking software or security platforms should be seen as an investment and safety net.
Many times, a cyber attack can have financial, legal, and even health and safety impacts on a company. Spending on cybersecurity can impact other risks the company might need to mitigate. It can also help you maintain data compliance for certifications and other standards you have to meet in your industry.
Blocking an attack protects company data and secrets, but it also helps safeguard the company’s reputation. A solid security system and policy help show you are committed to protecting your information and diligent about doing so. It goes a long way toward easing any concerns from potential clients, vendors, and shareholders.
Cyber insurance needs to be part of the discussion on spending on security since premiums have increased by more than 200 percent over the past year. Having a good tracking platform and security policies in place should be your primary plan, but insurance can provide a good safety net. It can’t replace or repair reputation damage, but it can lessen financial losses.
The CFO needs to understand the security plan, which should focus on identifying critical assets and their risks and vulnerabilities. Operations and regulatory needs should drive a lot of the choices you make in developing the plan.
How the CFO Should Be Involved
Managing any kind of company risk is a team sport these days, drafting most of the c-level executives to help develop strategy and policy. Every department is involved in risk mitigation in some way, requiring cooperation and input across the board. That includes the CFO.
The CFO’s primary role will be in managing the budget to ensure the company has the funds to spend on the appropriate level of security. Compliance mandates drive spending at 66 percent of companies these days, while any kind of near miss can grow your budget.
When the CFO understands cyber risks, it can be easier to get cooperation for budget increases since they can see how it impacts the entire business. No matter the cost of a system, there’s a greater cost to not having them in place if there’s an attack. The investment is small by comparison.
The CFO is also in a position to help set policies and ensure they become part of the culture. It’s mission-critical for everyone to be working together toward the goal of effective governance.
For public companies, the SEC recently proposed new rules around providing information about data breaches. More states have enacted their own versions of consumer privacy acts as well. The CFO can work with the security team to determine the most cost-effective way of complying with the rules.
Your CFO can also be tapped to help with thinking through the risk management issues, particularly around asking the right questions. They can also help translate and explain to the company directors about risk trends and what approach you’re taking to deal with them.
Stay Ahead of Threats and Compliance
Given the potential costs of a cyber attack, it’s important for the financial team to work with other departments to help the company maintain a proper defense. While dealing with data security falls into a different area, the CFO needs to understand the risks to their area and the company as a whole. They also should have a decent grasp of the software needed since they control the budget.
Need a better defense against cyber risks? Request a demo of how the Visore platform helps you better manage asset and data vulnerability for your company.