Here’s an interesting observation about cybersecurity regulatory compliance that applies to Public DIB contractors.

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Here’s an interesting observation about cybersecurity regulatory compliance that applies to Public DIB contractors. Do investors price in regulatory compliance to share prices?

We know that cyber regulatory compliance affects downside risk as cyber maturity increasingly signals management quality, and regulatory non-compliance can impact direct valuation post-incident. But, as we have seen over the years, share prices can drop, then bounce back.

However, what happens in the event of cyber regulations, such as the US DoD CMMC program, and a company loses an important contract? There is precedent that shows markets will react negatively, and it’s a double-edged sword for the DIB. On one hand, you lose a contract, on the other, you could face a legal case for non-compliance.

Let’s not forget that normally, investors may fear pricing pressure, weakening product quality, customer dissatisfaction, competitive displacement, and reputational deterioration. While this may be less pronounced for Prime defence contractors, it still applies to tier 2, 3, 4, 5, and 6 contractors. Where they could find themselves losing out to competitors, customer dissatisfaction, and regulatory fines.

@Thaddeus Dziekanowski Brian D. McCarthy

@Parava Security Solutions

#cmmc #cybersecurity #regulatorycompliance

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