Manufacturing is Risky Business

by Chris Talipsky 1. July 2016 09:26
Financial services, healthcare, and retail industry cybersecurity issues have been attracting the most headlines, but these are not the only industries facing significant cybersecurity attacks and breaches. In what may be a surprise to many people, manufacturing was the 2nd most targeted industry in 2015, according to IBM, behind only financial services. Indeed, as more manufacturing processes and infrastructure integrate technology, the more open they become to cyber attacks. And though manufacturing breaches may have flown under the radar for the general public, manufacturers are becoming increasingly aware of the looming cyber threat. In a recent manufacturing risk survey commissioned by BDO, 92% of manufacturers cite cybersecurity concerns, a 44% increase from 2013. According to Shahryar Shaghaghi, National Leader, Technology and Advisory Services at BDO, “all it takes is one weak link in the security chain for hackers to access and corrupt a product feature, an entire supply chain or a critical piece of infrastructure.” This vulnerability is illustrated by another finding of the survey: only 8% of manufacturers felt capable of preventing a breach. As a result, cyber risk management strategies are increasingly focused on response and resiliency, not just on prevention.

Seeking Cyber Resiliency in 2016

by Ken Urish 8. December 2015 11:40
In the evolving cyber risk management environment, cyber security is becoming an increasing priority for CFO’s, risk managers and financial executives. This is evidenced by the projected increased emphasis on cyber security for 2016 disclosed by two recent surveys. Consulting firm Protiviti surveyed 650 CFOs and found that, while margins and earnings performance top the list of priorities for 2016, cyber security risks are the next highest priority. TD Ameritrade surveyed 300 senior finance executives and found that 41% of respondents identified data security as an area for increased capital expenditures for 2016. With this increased emphasis, CFO’s are reacting to increased sophistication and frequency of cyber attacks, and a better understanding of the inherent financial risks. The true cost of a cyber breach is complex. A breach of intellectual property affects not just competitiveness, it also hurts market share due to reputational damage and loss of confidence by customers. Productivity suffers during the remediation process and the throughout the internal changes – system upgrades, procedural changes, etc. - that tend to be implemented following a breach. Then there is litigation expense, and in many industries, fines and fees from regulatory non-compliance. Along with growing awareness of the true cost of a breach is the acknowledgement by many risk managers that it is "not if, but when" a breach will occur. Therefore, the focus of the increased expenditures is not just for defense, but rather on preparing for efficient breach response and containment. Investments are increasing in cyber insurance, forensic tools, and for training staff in both protection and response techniques. In short, we are seeing a shift by CFOs and risk managers to a more proactive approach to cyber risk management. The goal - a cyber resilient organization.
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Do Your Diligence – Cyber Risk in Mergers & Acquisitions

by David Ritzert 10. November 2015 11:34
As M&A activity increases, so too does the need for cyber security assessments. Cyber breaches are often in the news headlines, however, many companies have been slow to adopt cyber security risk procedures as part of their due diligence process. Companies that plan growth through M&A activity should assess the cyber risk associated with their acquisition targets. The value of the target, as well as the overall enterprise, could be significantly impacted by a cyber breach. In addition to the potential loss in market value, an acquiring company that comes under attack can experience a major disruption to their normal operations, including increased costs and management efforts being diverted to remediation and shoring up defenses, rather than the integration efforts necessary to achieve the anticipated synergies from the transaction. When cyber security procedures are incorporated into the due diligence process, companies can proactively understand and mitigate the potential risks of acquiring a compromised entity. If your company is involved in M&A activity and you don’t incorporate cyber security procedures into the due diligence process, you could be putting your company and the contemplated transaction at risk.
Categories: Assurance

The Rising Tide in Risk Management

by Mark Gibbons 30. October 2015 15:59
Based on the results of a survey conducted in September 2015[1] with 150 directors of public company boards, it seems that directors are finally starting to understand their critical role in addressing cyber security. Indeed, cyber attacks are becoming more and more frequent, often targeting high-profile companies and their sensitive data and information. As the attacks become more widespread and damaging, the involvement of the corporate board in mitigating cyber risk has become an imperative. Of the 150 corporate board directors surveyed, 22% reported having experienced a cyber breach within the past two years, which has doubled since 2013 (11%). While those numbers are alarming, the good news is that 69% of corporate directors reported their board being more involved with cyber security than it was in the previous 12 months. Additionally, more than 70% of board members report having increased their company’s investments in cyber security within the last 12 months. 28% have purchased cyber insurance. Though the tide seems to be turning, the survey results indicate that there are many corporate boards and directors that haven’t yet taken key steps to mitigate cyber risk and protect their digital assets. Only 34% of directors reported having conducted a formal assessment of their critical digital assets, while 32% have had an assessment, but have no final strategy in place based on those assessments. Furthermore, although third-party vendors are a critical source of cyber attacks, only 35% of directors have developed cyber risk requirements for their third-party vendors. Has your board performed a risk assessment of its critical assets? Do you have a plan in place to mitigate cyber attacks? Don’t be the 21% without a plan in place.   To view the results of the survey, conducted by our Alliance partner BDO, click here. [1] Survey conducted by Market Measurement on behalf of Urish Popeck’s alliance partner BDO.
Categories: Risk Management