Annual global cyber losses are expected to reach $6-trillion by 2021, with cyber security spending set to exceed $1-trillion cumulative in the five years period leading up to 2021.
These are among the findings from a new report, “Prepare for the expected: Safeguarding value in the era of cyber risk” by Aon that gathered views from cyber-focused leaders from businesses in EMEA to share lessons learned in building cyber resilient organisations.
Businesses face financial loss in the form of immediate crisis expenses, regulatory fines, which have increased following the implementation of General Data Protection Regulation, and lost revenue resulting from an attack stopping the business from trading or disrupting core operations.
According to Zamani Ngidi, client manager: cyber solutions at Aon South Africa, as organisations grow their footprint – whether nationally or globally – they are also essentially increasing the likelihood of a cyber breach and also its impact, as the amalgamation and expansion of information technology infrastructure exposes an organisation to more points of entry and a larger pool of information which can be exploited.
“The general trend globally, specifically to cyber risks, is that organisations do not understand their biggest cyber risks and the implications they have for operations and the balance sheet,” says Zamani. “It is forecast that cyber-attacks will increase year-on-year, with ransomware attacks alone increasing by 350% annually in addition to total cyber insurance claims increasing from $400-billion to $600-billion in two years according to data released by Allianz,” says Zamani.
While the immediate financial costs of a cyber-attack can be crippling for a business, the report suggests that of equal or even greater concern is damage to a business’s reputation. The reputational crisis resulting from an attack can erode a company’s market value, destroy brand loyalty, limit companies’ digital transformation efforts and even lead to a credit-rating downgrade.
An effective cyber resilience strategy can help mitigate both immediate and long-term financial losses. A study conducted by Pentland Analytics and Aon found that a company’s preparedness to mitigate reputational risk and its management’s behaviour in the immediate aftermath of a crisis can have a notable impact on short and long-term share price reaction.
Onno Janssen, CEO: risk consulting and cyber solutions EMEA at Aon, comments: “Some companies still don’t fully understand the impact a cyber-attack can have on a business. Understanding the worst-case scenarios and their impact to a business is crucial to developing an effective resilience strategy in which cyber is managed as an enterprise-wide risk across the entire organisation.
“The cyber threat is amorphous, and the technology it exploits is advancing at a dizzying pace, so the risk landscape is never going to stand still. The C-suite will have to aim to constantly improve its holistic cyber risk-management strategies to prevent, prepare for, and be able to respond to a cyber crisis. Ultimate responsibility for all risk management efforts resides in the boardroom.”
Aon’s report outlines four steps to building a cyber resilient organisation:
* Take it from the top. Cyber risk management must be an enterprise-wide effort, but accountability needs to sit at the very top of the organisation, with the board understanding the costs and consequences of a cyber attack.
* Unite your business. Cyber risk is not just an IT security issue; it is a threat to the whole enterprise. It calls for a multi-discipline, multi-level response that involves every relevant stakeholder within the business.
* Get ahead of the game. Businesses can no longer rely on bringing in a response team after an attack. Incident-response training is critical in preparing organisations for a cyber-attack and scenario-planning helps to understand operational vulnerabilities and threats.
* Protect your balance sheet. Firms should look at how they are leveraging available risk transfer opportunities. Cyber insurance can help protect an organisation’s balance sheet by providing a financial pay-out after things have gone wrong and providing pre-loss prevention and post-loss services.