Regardless of their size and industry, businesses are increasingly digitizing their activities to attain higher operational efficiency. However, this spike in digitization introduces new endpoints to the business ecosystem. Hackers could exploit these endpoints to cause widespread disruptions, hurting the company's margins and reputation.
Any disruption that affects a business' margins is a business risk. Business leaders should consider cyber threats to be business risks in order to protect against further attacks and loss of revenue. For instance, in 2021, 82% of respondents in a survey claimed their organizations lost 10-12% of revenue to cyberattacks. The same study claimed that some organizations tackled at least 200-500 cyberattack attempts daily, making a clear case for including cyber threats in the corporate risk management strategy.
Many companies treat cybersecurity as an IT issue, but this is a mistake. Cybersecurity is a core business risk that needs to be managed at the highest levels of the company. Here are four reasons why:
1. Cyberattacks can have a significant impact on the bottom line.
Cyberattacks can lead to lost revenue, higher costs, and reputational damage. For example, a data breach can lead to customers fleeing, loss of business opportunities, and legal and regulatory problems.
2. Cybersecurity is essential for protecting company assets.
Cybersecurity is not just about protecting customer data; it’s also about protecting the company’s own critical data and systems. A cyberattack can disable key systems, leading to downtime and lost productivity.
3. Cybersecurity is a competitive differentiator.
In today’s business environment, companies that are seen as leaders in cybersecurity have a competitive advantage. Customers and partners are increasingly looking for companies that they can trust to keep their data safe.
4. Cybersecurity is a Board-level issue.
The risks posed by cybersecurity are too great to be managed by the IT department alone. Cybersecurity needs to be overseen by the Board of Directors and treated as a core business risk.
By treating cybersecurity as a core business risk, companies can better protect themselves from the damaging effects of cyberattacks.
Cyber threats are a business risk
Since businesses leverage technology, it creates new vulnerabilities through new endpoints. A successful cyberattack can cause severe damage to a business. Cybercriminals can steal sensitive business data such as intellectual property, business plans, or customer details.
These cyber breaches can cause millions of dollars of damage besides opening the companies to financially draining lawsuits. Brandon Wales, executive director of CISA, sums up the scenario best by saying that boards must push their business plan to invest more in digital protection. He added that insurers and shareholders should pressure companies into incorporating cybersecurity in risk management plans to mitigate business risks.
Some of the cyber threats to businesses
Cybersecurity should remain a core functional unit for every business, irrespective of any industrial sector. During the Wall Street Journal's CIO Network Summit, Wales lamented that despite companies facing growing hacking risks, cybersecurity was still not ingrained in corporate thinking. This shift needs to happen at the board level. You don't want to start thinking about security after ransomware brings down your network, Wales said.
Let us explore some of the prominent cyber threats that pose business risks:
Ransomware attack: In this attack type, the attacker targets enterprise systems like PCs, servers, or cloud backups by sending malware to encrypt all the files and data. Such an attack renders all data or systems inaccessible to legitimate or authorized users. After encrypting the data, the attacker contacts the business or the system owner for a ransom. If the attacker receives the payout, they might give the decryption key. The business risk increases when attackers leverage the potential of double and triple extortion ransomware.
Insider threat: While most enterprises focus on securing their endpoints from external threats, they ignore the threat potential of an internal attack. Disgruntled employees can bring the whole system crashing down to cause immeasurable damage to the company’s resources and reputation. In an insider threat, disgruntled or malicious employees steal enterprise data and share it with business competitors for revenge or for monetary benefits.
Phishing attacks: Phishing attacks are another well-known attack vector. they target corporate employees to carry out persistent attacks on the company's technological assets. The attackers mostly use emails as the delivery mechanism. Through these emails, they send links that redirect to fake web pages. The target unwittingly provides credentials to the attacker, who uses them to access corporate systems. Attackers perform phishing attacks for various reasons, such as gaining access to sensitive corporate data, privilege escalation, or initiating a transaction.
Preventive measures to help reduce risk
Enterprises should incorporate various defensive measures to reduce attackers' ability to use technology to cause problems. According to Wales, Corporate Chief Information Officers (CIOs) must contact CISA frequently to gain insights into cyber defence. As boards learn to assess defensive measures, cybersecurity will become more ingrained in various corporations.
Here are some preventive measures enterprises can take against technology-driven business risks:
Critical infrastructure operators, such as those handling massive customer data or financial services, should remain aligned with government-mandated cybersecurity compliances and requirements.
The US Securities & Exchange Commission proposed that all companies detail their cyber expertise to the board. The CIOs should underline the different third-party risks associated with the company when discussing cybersecurity with the board.
Enterprises should back up their data in isolated storage and environment to safeguard them against malware.
Enterprises should educate employees not to open emails from unidentified sources or click links to social media posts unrelated to the company's tasks or employees.
Increased digitization has eased business operations and created newer endpoints for hackers to pose cyber threats. Boards must reassess their business plans and consider cyber threats as business risks capable of disrupting operations with far-reaching consequences. A robust defence mechanism, in line with CISA's recommendations, can help businesses mitigate the threats while ensuring continuous operations.