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A great article, cyber risk poses a significant risk to the balance Sheet. We can debate whether we mean balance sheet or financial statements in general and where it impacts more, or less. But the fact remains that cyber risk as a non-financial risk, has a significant impact on a companies assets static or fluid and increasingly a material one.
I agree that there is no science behind how and where, to build a definitive model. However building a cyber capability, brand and reputation damage, incident remediation and regulatory fines all have cost and revenue implications. Precedence is set; if you’re listed in the US your Sarbanes Oxley audit will assess material financial risks to the balance sheet. If you’re a bank you will hold regulatory capital covering operational risks (aspects of cyber). Auditors have a duty of care to challenge an organisations ability to manage all material balance sheet risks. I have gone through financial audits where cyber is raised as a material risk to the balance sheet. A change in credit scoring, a 2-4% GDPR fine or the impact of cyber events e.g WannaCry pose material risks.
For security to be effective and to speak a common board language the impact of cyber and data risk to the balance sheet has to be considered.
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