Cybersecurity is no longer just an issue for IT; now it is an issue of finance. With increasing connectivity in our world, a data breach and/or cyberattack represents a sea of financial damage well beyond just the initial technical burden of recovery. Businesses that fail to recognise and quantify these invisible issues are exposing the financial viability of their business.
Beyond IT: Why Cybersecurity is a Financial Imperative
Understanding that the true cost of an incident that previously happened extends far beyond the initial remediation effort. Knowing what they look like financially will begin to improve your overall defence.
1. Direct Attack Costs.
We all feel the immediate financial drain when experiencing a breach. Direct loss from theft and fraud comes into play often in the form of wire transfers and compromised accounts. Many businesses face sizeable ransomware costs just to get access to critical systems, not to mention emergency IT costs and even forensic investigation fees. This is all incurred from the rapid attempt to understand the damage, including the source and the breadth of the breach.
2. Long-term Costs.
The longer-term costs will be catastrophic. Loss of brand reputation and customer trust directly can substantially decrease sales and market share. Loss resulting from penalties for violating regulatory statements of good data security could also cost millions (e.g., GDPR, CCPA) in addition to class action lawsuit fees. Increased insurance premiums are common, and if the breach is serious, you could potentially lose initiative value in the way of stock valuation as investors perceive irreversible incompetence.
From Reactive to Proactive: New Room for Financial Professionals
The chaotic financial landscape calls for a shift in paradigm, positioning financial professionals about the cybersecurity strategy. This technology evolvement is unprecedented, leaving the need for thinking and innovation in its wake.
The role of the CMA in Financial Readiness.
A Certified Management Accountant (CMA) is critical in ensuring that the financial stability of an organisation is protected from cyberattacks.
- A CMA will conduct a budgeting of money for cybersecurity and allocate resources to that activity to ensure that you get the best protection for each dollar spent.
- A CMA will assign values to measure instances of breaches and impacts of incursions, not only providing a picture of risk but also assigning dimensions to adorn performance dashboards in terms of security (and metrics).
Because cyber risk can end up as a major component of supplier risk, a CMA can invigorate a security risk culture through ‘secure by design’ from the financial lens of addressing an ROI of prevention from a financial lens.
The Role of the FRM in Risk Management.
A Financial Risk Manager (FRM) offers capabilities and competence to quantify and model cyber risk.
- An FRM can populate cyber risk with the ERM (enterprise risk management) framework, because it is vital for the business to view their total exposure.
- An FRM can stress test what the business financial position can endure from cyber attacks with some stress tests and be able to specifically examine advanced mitigation strategies and advice on various risk transfer options, including specific cyber policies.
The Synergistic Advantage: The Case for Both
This is a “win-win” to ensure maximum protection. A CMA and an FRM approach to financial cyber risks is your best defence.
- A CMA understands how to allocate resources and the appropriate financial controls to ensure there are no leaks.
- An FRM can explain how to quantify and reduce emerging risk.
Together, they give organisations not only a security budget but also an understanding of financial risk and a wealth of knowledge of risk in the digital age.
Conclusion: Your Role as a Financial Guardian
With the rise of increasing cyber threats, the finance professional is the last line of defence. Use insights and strategic risk management expertise to build a resilient financial infrastructure so you can protect your enterprise’s profitable growth from unexpected risks.
Cybersecurity expenditures should no longer be treated as a disaffected cost centre but rather as an investment in aspects that truly matter to the business, such as continuity of operations, trust in the brand, and financial well-being long-term. Individuals that hold CMA and FRM designations are uniquely suited to take on the mantle of financial guardian, transforming hidden threats into risks that can be managed appropriately for their future security.
