(Article supplied by AUP IT. July 2024). In recent years, businesses worldwide are grappling with the increasing financial threats posed by cyberattacks. With a notable 7% rise in attack intensity from 2022 to 2023 and similar projections for 2024, the financial damage from these attacks is expected to escalate by over 17% globally, potentially reaching a staggering $10 trillion.
The 2024 Cyberthreat Landscape
The evolving cyber threat landscape poses significant challenges for businesses. The drivers of escalating cyberattacks include:
- Profit Motive: Cybercrime is increasingly lucrative, driven by untraceable cryptocurrency transactions.
- Cybercrime-as-a-Service: The Dark Web offers easy access to attack tools, lowering barriers of skill and time.
- State Actors: Nations like China, Iran, North Korea, and Russia are engaging in cyber warfare, targeting both the public and private sectors.
- AI Advances: Cybercriminals use AI to enhance attack efficacy, including creating deep fakes and self-modifying malware.
- Increased Technology Use: The growing digital footprint and remote work increase vulnerability to cyberattacks.
The Role of CFOs in Cyber Risk Management
Despite the significant financial impact of cyberattacks, only 20% of organisations currently involve their CFOs in cyber risk management, even though 34.5% have experienced attacks targeting financial data. CFO disengagement often stems from viewing cyber risk as a purely technical issue and being overwhelmed by other financial risks. However, this non-engagement is no longer tenable for several reasons:
- Magnitude of Cyber Risk: Cyberattacks pose an existential threat to companies, requiring CFO acknowledgement and engagement.
- IT’s Limitations: IT departments alone are not equipped to address cyber risks from a financial perspective, necessitating CFO involvement.
- Integration of Financial and Technology Risks: Financial and technological risks are intertwined, requiring comprehensive risk management strategies.
Five major financial risks from cyberattacks:
Businesses face significant financial risks from cyberattacks, including legal and regulatory exposure, which can lead to substantial fines and legal costs. Supply chain disruption can cause operational delays and increased expenses. Additionally, cyberattacks can result in a loss of company value, diminishing investor confidence and damaging reputation. Future revenue may be lost due to reduced customer trust and business opportunities. Finally, frequent cyber incidents can negatively impact a company's insurability, leading to higher premiums or difficulty obtaining coverage.
Actionable Steps for CFOs
To effectively manage cyber risks, CFOs should consider the following steps:
- Catalogue and Size Risks: Develop a comprehensive catalogue of potential financial impacts to guide mitigation strategies and resource allocation.
- Third-Party Assessment: Conduct independent assessments to accurately identify vulnerabilities. Internal IT departments may not objectively assess their work, and cybersecurity companies might have biases.
- Create a Team and Process: Establish ongoing risk management processes with regular updates, assessments, and communication involving IT, legal, key suppliers, and other stakeholders. Continuous improvement is essential.
The financial implications of cyberattacks necessitate active involvement from CFOs to ensure comprehensive risk management. As cyber threats continue to evolve, integrating financial and technological strategies is crucial for safeguarding company assets and ensuring long-term business resilience.