As A Business Leader, You Must Manage Cyber Risk

Uploaded on 2023-04-25 in TECHNOLOGY--Resilience, FREE TO VIEW

Cyber attacks are a key risk for boards and happen more often than people think. Such criminal acts usually make the headlines when they involve large data breaches or significant public disruption. The extensive use of technology in every facet of the business world urgently calls for security solutions that keep corporate networks and user data safe.

Cyber crime is carried out using tactics such as stealing access credentials and infecting systems with malware, ransomware and phishing – poses a threat to data, processes, systems and customers. Even worse, cyber criminals might initiate a breach and exploit the incident by shorting the shares of their victims. Cyber security is therefore increasingly important for Directors.

Addressing cyber risk is a challenge for nearly any company and its board. Cyber is a complex, technical area with emerging threats occurring almost weekly. Most board members are not cyber experts, yet boards have an obligation to understand and oversee this significant risk. They need active engagement with leadership, access to expertise, and robust information and reporting from management.

While some companies are keeping pace, many are working to upgrade their infrastructures and can miss key gaps in cyber security. The latest spate of ransomware attacks across large enterprises with deep pockets and public agencies suggests no one is immune. As cyber security is becoming a major focus in many corporate boardrooms, the growing threat of ransomware and systemic risks facing corporations today are making it an even more critical topic.

Any director seeking to add value to corporate stakeholders should have an appreciation for this growing risk.

As the US Securities and Exchange Commission (SEC) about to publish new regulations requiring publicly traded corporations to document their risk mitigation measures and name who on the board is a cyber security lead, we expect all boards will be revisiting the optimal ways to manage cyber risk. Corporate Directors should not wait for final rules from the SEC to start gap analysis on how the corporation is managing cyber risk.

Some steps that can be taken right away:

Boards should be talking with management now to make sure there is clarity on current corporate processes and procedures for incident response and for cyber risk mitigation governance. A gap assessment should be conducted to assess the difference between best practices and current corporate practices.

All directors should seek to understand and mitigate cyber risk by leveraging expert advice from experienced risk management professionals. External advisors can rapidly evaluate board expertise relevant to the cyber security qualifications and can recommend additional training for the full board or the board designated cyber expert.

Every business is different. The threat to your business needs to be contextualised to be mitigated. For most large complex organisations this will probably mean convening a strategy session with key leaders from across the organisation where the new nature of the threat can be discussed. which leads to the next key recommendation, this needs to be treated as a business issue not just a security issue.

Ensure planning involves business leadership, not just IT and Security. Cyber attacks against the nation’s infrastructure and against infrastructures of other nations where your business or suppliers operate are issues for all leaders, not just cybersecurity and technology leaders. Leaders should examine topics of business resiliency and disaster response with an attitude towards long term business survival and support actions that will enable improved overall business resilience.

Many boards will decide to form cyber security committees so a few designated board members can work issues with management outside of board meetings.

Monitor execution, especially on actions requiring people to think differently. The cyber threat is so different it may be cause for actions many organisations never planned for. For example, organisations may need to rapidly learn to use new “out of band” secure communication systems for executive communications and for communications with staff and all employees.

Organisations may even need to revert to manual paper copy interactions with suppliers, banks and other stakeholders. Boards may need to meet and exercise governance without access to online data of any sort.

Understanding Cyber Security

Above all, a board of directors must understand that cyber security is a dynamic discipline that requires unending monitoring and innovation. Laying the groundwork for reduced risk is essential but so is the knowledge that risk will always be there. Companies should also assess their existing insurance policies, whether they adequately cover asset value in the event of a breach, and if dedicated cyber insurance may help further mitigate risk.

No matter the size of your insurance policy, leadership must remain involved and educated in cyber security for the business and prepare policies and procedures in the event of a breach with an eye toward responsibility.

Business leaders need to take action to keep informed of emerging cyber security, geopolitical and technological developments that contribute to systemic risks and that you check the links below and sign up for Cyber Security Intelligence’s Directors Report series, exclusively available to premium subscribers (below).

ZScaler: IMD: PWC: Corporate Governance Institute: Dataminr: Oodaloop:

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