“You don’t have to be one of the recent, high profile corporate victims of a cyberattack to realise that cyber is a clear and present danger.”
So began Will Brandon, the Bank of England’s Chief Information Security Officer, in his speech to the recent City Week conference. Brandon, the man charged with advising Britain’s financial sector about cybercrime, couldn’t be more correct. Despite businesses’ being more aware than ever of the serious threat cyberattacks pose, they are not doing enough to protect themselves and their customers.
There are no excuses for this lack of leadership. The security of a company’s systems and data cannot be the sole responsibility of its technical staff. Even if cyber threats are, as Brandon suggests, “unclear” and the “perpetrators notably absent,” the fiduciary duties of board members must include being aware of all possible threats.
Yet many boards are still grappling with understanding cyber risk and ultimately determining their appetite for that risk. Our own research, conducted in partnership with NASDAQ and Goldsmiths, University of London, has shown that only 10% of non-Executive Directors from highly vulnerable businesses agree that they are regularly updated about the types of threats to cybersecurity that are pertinent to their business. In the United Kingdom, only 29% of the most-vulnerable C-suite executives have gone through risk assessments related to cybersecurity — globally, this drops to 13%.
We’ve seen a number of high profile hacks dominate the headlines this year, and it’s not just businesses being affected. Nations suffer, too, including Ukraine’s power-grid being breached and the Philippines losing great swathes of its electoral voting records earlier in the year. But for businesses, it’s easy to imagine the amount of reputational and financial damage that might have been saved had the leaders of the organisation been more aware of the threats, or had clear and consistent data to measure their appetite against these risks. Drops in pre-tax profits, ballooning exceptional charges, public embarrassment, and many unhappy customers — all could potentially have been avoided.
“So how do you balance cyber risk against other risks?” Brandon asked. “I suppose the first thing is to quantify it, at least to the extent you can. That might involve assessments or testing, but it probably starts with working out who might do what to which part of your estate. Or to put it another way, breaking the risk down into threats, vulnerabilities, and assets.”
Joan Conley, Senior Vice President and Corporate Secretary, Nasdaq, counsels businesses that “in determining risk appetite, the board should define its commercial objectives and understand all of the risks, including legal, operational, competitive, and reputational, that might impact those objectives. Only then can the board express the levels of risk that are desirable. They’ve then got to continue to understand the likelihood and impact of key risks across the entire company – and monitor that the executive continues to operate within the established risk appetite.”
No matter the risk appetite, every organization can minimize risk by following basic practices of security hygiene and having a tested incident response plan in place. Boards also need to ask questions to ensure leadership is taking cybersecurity into account as part of overall business operations:
Once you have a common set of metrics defined, IT and Security leaders can jointly determine the company’s risk appetite, along with leadership peers and governance members.
Cybercrime is a serious and complicated risk. If a company’s leadership takes the time to become aware of the unique challenges facing their organisation, that risk can be mitigated. As Will Brandon put it, “People need to be led. Processes need to be managed…. cyber is, to a great extent, a leadership and management issue. Leadership that needs to be applied from the top – not just from the IT department.”
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About the author: Richard Olver is Vice President, EMEA, at Tanium in London.