Call us now:
One wonders how long it will take for investment funds to realize that cyber is a bigger problem than ESG?
ESG performance has not demonstrated the effect on corporate performance, that cyber seems to (credit risk, market risk, operational, strategic, legal and compliance risk). Nor the effects that cyber regulation, that has been passed (with more to come), has on corporate performance. Corporate performance that can be affected by factors inside and outside the control of board rooms.
The views of a reasonable, dare one say average investor, is now a consideration for SEC covered boards for material cyber risk management and incident reporting. Boards must demonstrate adequate compliance to cyber regulations and account for the appropriate management of material cyber events. Or face regulatory scrutiny, that comes with civil and criminal penalties.
While covered firms cannot control the weather, they can control the management of Environmental, Social and Governance (ESG) factors. When one considers cyber, boards cannot control the threat (good luck with asking Russian, Chinese, Iranian or North Korean threat actors to stop, or preventing Johnny from leaking your data from his(or her) bedroom); boards have in general demonstrated that they have not managed cybersecurity maturity inside their firms, or manage cyber maturity across their supply chains; they now have regulators and markets breathing down their necks.
One suspects markets will play an increasingly important role in the financial performance of cyber regulated firms. Is one the only one that sees a correlation between cyber risk management, share price, financial markets and short selling?
Ted Dziekanowski Brian D. McCarthy
Veritas GRC
#cybersecurity #cyberriskmanagement #cyberregulation
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