Cybersecurity is not just an IT risk, it impacts a business as a whole. A report from IBM found that data breaches cost organizations about $3.86 million per attack. Since the past two decades, there has been a sharp increase in cybersecurity attacks on businesses and internet advertising. As a result, the costs that organizations incur because of the attacks are huge. A recent report by PwC found that 75% of CFOs are now involved in high-level cybersecurity decision-making. This is majorly because cyber attacks have immense impact and since CFOs are responsible for managing the assets of the firms, there is a constant need to manage the cyber threats and risks associated with the digital components. They need to ensure that the organizations remain compliant with the relevant regulations and standards as non-compliance can lead to hefty penalties.
Cybersecurity is no longer observed as a good-to-have aspect of a business, it has become the need of the hour. CFOs, in most organizations, have been levied with the responsibility to ensure adequate funding for cybersecurity measures including disaster recovery, cyber insurance policies, training and so much more.
Impact of cybersecurity attacks on businesses
Financial loss:
This is one of the key reasons why cybersecurity is no longer viewed as a mere IT-related problem. These attacks can lead to significant financial loss for the businesses. These losses can be a result of one or many of the following:
- Ransomware attacks
- Direct theft of funds through fraudulent activities
- Costs incurred when responding to these attacks, such as forensic investigations and legal fees
- Operational interruption due to downtime and disruption
Reputational damage:
A cybersecurity attack does not impact the internal members of the business alone. In fact, in industries like accounting it is the clients who bear the brunt of such attacks. Such attacks often lead to a company’s damaged reputation, including:
- Loss of trust and confidence
- Negative publicity and media attention
- Decreased in market value, stock prices, and investor confidence
- Long-term damage to the company’s reputation, often leading to a loss of current and future business opportunities
Regulatory and legal consequences:
Many of the attacks happen because of non-compliance with the regulatory standards. Even if that’s not the case, businesses may suffer regulatory and legal implications from cybersecurity attacks. These can include:
- Legal actions from affected clients, partners, or employees
- Increased scrutiny and oversight from regulatory bodies
- Fines and penalties for non-compliance with data protection regulations like GDPR, CCPA, etc
- Obligations to keep the affected parties informed and provide credit monitoring services, adding to the overall costs
Operational disruptions
Cyberattacks also hamper daily operations, leaving them disrupted and at a halt for a significant amount of time. This can be caused by:
- Downtime of critical systems and services, leading to loss of productivity
- Corruption or loss of important data, that impacts business continuity
- Diversion of resources to manage the breach and recovery efforts, impacting other business activities
- Long-term operational challenges as the organization works towards restoring and improving its cybersecurity
The role of CFOs in combatting cybersecurity risks
Assess risks- The cybersecurity threats associated with firms depend on several factors – the kind of financial information they are dealing with, the volume and sum of money that can be extracted, the amount of exposed information, the means to get it, etc. CFOs need to evaluate the risks of vulnerabilities associated with the organization. The next step is to rank and prioritize them because of the different consequences, impact, and likelihood. While some risks will be present as residuals, others can come back in different shapes and forms. Some need to be constantly monitored by maintaining a risk register and keeping a close watch on the factors.
Implement robust internal controls- Controlling access to sensitive financial information is critical. CFOs should ensure that only authorized people within the organization and outside have access to the financial systems and information. By implementing restricted access policies and multi-factor authentication, CFOs can help establish better security while protecting the data.
Conduct regular checks and audits- Audits are an essential part of any organization, especially for finance and accounting businesses. It is the responsibility of the CFOs to conduct both internal and external audits to identify vulnerabilities in financial systems and processes. The CFOs should collaborate with the IT and cybersecurity teams to make these audits thorough and impeccable. This will help the teams become alert of any weaknesses and discrepancies.
Invest in cybersecurity technologies- CFOS must keep the businesses prepared for any attacks. One of the key mistakes that leaders make is that they wait for an attack to happen before securing their businesses. Investing in advanced cybersecurity technologies, such as firewalls, intrusion detection systems, and encryption can help keep the data safe, reducing the chances of attacks. The CFOs should stay updated on the latest cybersecurity trends and tools to safeguard financial data effectively.
Develop a comprehensive incident response plan- A comprehensive incident response plan helps organizations prepare better in times of crisis. It is essential to reduce the impact of cybersecurity incidents as much as possible. The plan should outline the steps to detect, respond, and recover from cyber-attacks. Testing and updating the plan regularly and conducting demos within the organization helps teams prepare better.
Cybersecurity threats are becoming sophisticated and the role of the CFOs nuanced. In the ever-changing world of accounting, it can be difficult for firms to stay prepared for cybersecurity attacks. This is where outsourced CFOs play a significant role. Their expertise in risk management, cost-effective solutions, implementation of best practices, and continuous evolution allows businesses to leave the worry of cybersecurity threats behind and focus on core activities.
To know how outsourced CFOs can help, write to us at connect@finsmartaccounting.com.
Maanoj is Co-founder & Director of Growth Strategy & Alliance at Finsmart Accounting. He is an Outsourcing Expert, a People Champion, and a Dynamic Leader with strong Business Strategy and Scaling-up experience. He has incubated businesses, sold & exited ventures; helped build strong enterprises in very diversified verticals like Fintech, HR & Consulting spaces in various CXO capacities over the last 20 years.
