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The impact on corporate value of a cyber attack is laid bare when you examine the impact of attacks on revenue, cost and shareprice. Moody’s downgrade of Equifax earlier this year was in part due to the cyber incident it suffered in 2017. But more importantly for me, it was based upon the longer term impact of the breach on Equifax. The impact of implementing a cyber security programme to secure the company has added $1.25Bn to the security budget and claim settlement costs have added a further $700Mn to the cost base.
There is a lesson which boards can learn. Whilst investors don’t like uncertainty, it maybe better to increase your cyber security spend before a breach. Than have to find a way to absorb the related remediation and security costs after the event. You can control pre-breach costs whereas, post breach costs are difficult to control and to a degree manage market expectations.
Cyber expenditure considered as a loss avoidance mechanism, or a loss reduction strategy in line with a cyber risk quantification (CRQ) programme is a sensible option. Prioritizing cyber spend and solutions based upon the potential risk to the balance sheet is an approach companies are considering. One which a companies risk and audit committee should already have a view on.
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