Cybersecurity breaches have risen to the top of the financial threat list for businesses, necessitating the involvement of CFOs in risk management.
Cybersecurity breaches have risen to the top of the financial threat list for businesses, necessitating the involvement of Chief Financial Officer (CFO) in risk management. Over the next ten years, the biggest challenge to the global economy will be national and corporate cybersecurity.
The enormous financial risk associated with prevention and recovery is one reason why global business leaders prioritise cyberattacks above all other risks. According to IBM and the Ponemon Institute’s annual Cost of a Data Breach Study, the average cost of an attack has been steadily increasing and now stands at 3.9 million USD.
CFOs Should be More Cybersecurity Conscious
CFOs do not need to be cybersecurity specialists, but they can help to deter cyber threats wherever possible. Their risk management skills, on the other hand, are critical because they have the training and knowledge to measure financial risks and ensure that the business is taking appropriate measures to mitigate them.
CFOs cannot necessarily delegate the task to IT and risk management experts due to the financial risk. They do, however, need to be aware of the importance of technology in combating cyber-threats. They’re still in a great position to ask the right questions to technical and security experts to ensure the company is complying with regulatory and privacy requirements.
The cybersecurity threat is not for the IT department itself, but the threats are relevant for the all the staff in the organisation. As a result of the increased visibility, it is becoming increasingly necessary for a CFO to be tech savvy.
CFOs must be knowledgeable about IT security issues, preferably within the context of several legal systems.
Cyberattacks can have a devastating impact on the company’s finances and reputation, which is the CFO’s core responsibility. Because of the growing concern about cybersecurity, CFOs must hold it at the top of their priority list at all times.
Cyberattacks & its Impact on Finance
Every year, more than a million cyberattacks occur. The majority of attacks fail, and only a few have the destructive impact of Wannacry and other lethal malware, that compromises millions of computers around the world. Smaller cyberattacks, on the other hand, may also have a major effect on business infrastructure.
CFOs must become active in cybersecurity management because financial aspect is also vulnerable to malicious attacks. Direct financial costs, heavy regulatory penalties, and a lack of confidence among consumers, workers, and suppliers are all potential consequences of a cyber attack. It may also be systemic, impacting a number of companies and supply chains. As a result, the costs are huge.
Cyberattacks are particularly alarming for finance departments. Hence, CFOs must become familiar with new IT cybersecurity issues as well as its legal structures.
Every CFO’s focus is quickly becoming training staff on the risks associated with cyberattacks and preventive measures. As the number of data breaches rises, CFOs must be vigilant and collaborate with IT experts on a regular basis.
Data, Data Breaches & Regulations
CFOs should understand that a solid understanding of data management is crucial for any organisation. Today’s CFO must process sensitive and confidential data and prioritise the company’s security if he or she is to fulfil their position. To improve cybersecurity, an increasing number of companies are tracking their employees’ usage of data, but this comes at a cost – and it’s not only monetary.
In several countries, regulatory standards for businesses about cybersecurity have become even more stringent, and CFOs must assist their companies in complying with and reporting on the risks.
Furthermore, the EU’s General Data Protection Regulation (GDPR) stipulates steep penalties for poor security practises. Companies must notify the GDPR within 72 hours of discovering a data breach, which leaves little time to determine the possible consequences.
As a result, if a data breach occurs, CFOs must collaborate closely with legal, IT, and security teams to determine the scope of the damage for purposes of reporting and disclosure.
CFOs should act quickly to contain the damage in the event of a data breach. To deter potential attacks, they should also work to close any loopholes in the finance department’s measures and controls.
It is also crucial to inform stakeholders in order to ensure widespread security compliance.
Team Working & Collaboration
CFOs should become active members of the security team rather than being passive observers. CFOs should learn to understand their company’s cyber exposure vulnerabilities, as well as the financial risks that these gaps pose to the company, its employees, and its processes.
The issue of cyber security, it is speculated, would finally become too big for the CFO’s team to handle alone. This will assist them in determining where and how much security services and investment should be applied. To consider all of the risks and future costs, CFOs must collaborate with their Chief Executive Officer (CEO), Chief Information Officer (CIO) and Chief Information Security Officer (CISO) on a regular basis to discuss cyber-risk exposure.
CFOs should also ensure that their cybersecurity policy is in line with their overall business objectives. In exchange, security experts must communicate in a language that executives comprehend. When CFOs evaluate the business’s overall health and risk posture, CFOs should keep cyber risk at the forefront of their minds, making it part of their daily conversation with the C-suite and other operational leaders.
In future, the complexity of cybersecurity challenges may also necessitate the creation of a new boardroom role.