Cyber crimes are increasingly becoming one the most costly & disrupting events that businesses face. CFOS must be equipped to mitigate cybersecurity risks in their organizations. Businesses highly depend on technology and face numerous cybersecurity threats across their business practices. These threats pose financial risks, damage a company’s reputation, and disrupt its operations.

As the financial leader of an organization, it is the responsibility of a CFO to ensure that cyber risks do not compromise the company’s financial health. This requires a proactive approach towards cybersecurity and risk management.

TAG Solutions can provide CFOs with a comprehensive risk management strategy to tackle these cyber risks effectively. We aim to provide some proactive measures CFOs can take to manage risk from a cyber perspective.

Types Of Cybersecurity Risks

Cyber risk is the potential damage caused by individuals or groups exploiting vulnerabilities in a company’s digital infrastructure. This damage can take various forms, from theft of sensitive data and intellectual property to disrupting operations due to malicious software. Cyber risks can come from multiple sources, including external hackers, inside threats, and careless employees.

The severity and impact of these risks can range from minor inconveniences to significant financial loss, damaged reputation, and regulatory penalties. Understanding cyber risk is the first step toward establishing effective cybersecurity measures and protection strategies.

Countless types of cyber risks exist and can pose a significant threat to a business. From sophisticated phishing attacks and malware infections to data breaches and ransomware incidents, the landscape of cyber threats is ever-evolving. Many businesses are unaware of some of the types of attacks let alone prepared for how to prevent them.

Businesses must understand these risks and implement robust cybersecurity measures to safeguard their sensitive information, protect their reputation, and ensure the continuity of their operations.

Phishing Attacks

Phishing attacks are among the most common cyber threats businesses face today. Often these attackers present themselves as a trust worthy person or organization, like a bank or government regulator. These attacks involve sending deceptive emails or texts that trick recipients into revealing sensitive information such as usernames, passwords, and credit card numbers or clicking on malicious links or attachments that install malware on their systems. 36% of all data breaches involve phishing attacks.

Malware Attacks

cybersecurity risks Malware Detected Warning Screen

Malware is a broad term that encompasses various types of malicious software, including viruses, worms, Trojans, ransomware, and spyware. An estimated 500 million ransomware attacks were performed globally in 2022. These malicious programs can disrupt operations, steal sensitive data, and damage systems. Ransomware, a type of malware, encrypts a company’s data and demands a ransom for its release, causing significant business interruption and financial loss.

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Tailgating Attacks

Tailgating in cybersecurity refers to a social engineering attack where an unauthorized individual gains physical access to a restricted area by following an authorized person closely enough for the door to remain open. It’s like the physical version of piggybacking onto someone else’s coattails to sneak into a party.

How it works:

  • The attacker waits outside a secure area, like a building or a computer system, until an authorized person enters.
  • They then follow the authorized person closely, remaining just behind them as they swipe a badge, enter a PIN, or use another access control method.
  • The attacker slips through the open door before it closes, gaining unauthorized access to the restricted area.

Denial-of-Service (DoS) And Distributed Denial-of-Service (DDoS) Attacks

DoS and DDoS attacks aim to disrupt a company’s online services by overwhelming them with excessive traffic, rendering them inaccessible to legitimate users. These attacks can cause significant operational disruptions and be used as a smokescreen for more nefarious activities. These can be seem completely random as if you share an IP or server for your website or web application, you may not even be the intended target of this attack. In some cases it might be your provider who could be the target themselves.

Third-Party And Supply Chain Risks

Companies also face substantial cyber risks from third parties and their supply chain. If a supplier or partner is compromised, this can have a ripple effect, leading to a data breach or other cyber incident within your company. It’s essential to assess the cybersecurity posture of any third party or supplier you work with, especially ones who have access to your networks through API’s or direct access.

Advanced Persistent Threats (APTs)

APTs are long-term targeted attacks where hackers gain access to a network and remain undetected for an extended period. During this time, they steal data or disrupt operations. APTs are usually conducted by well-resourced and skilled groups and pose a significant threat to businesses.

Each of these cyber risks requires specific countermeasures and mitigation strategies. A proactive approach to cybersecurity involving regular risk assessments, the implementation of robust security protocols, ongoing staff training, and incident response planning can help CFOs manage these risks effectively.

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Strategic Role In IT Risk Management

The CFO has a strategic role in driving IT investments in a company. Understanding the value of such investments as risk management tools, as well as potentially a tool to drive efficiency. This is a far better way to look at IT investments. Often IT is looked at just another cost in the business, of course it is prudent to ensure that investments align with the company’s strategic objectives and mitigate potential risks. It is not an easy task to balance the need for innovation, with cost, risk, and benefit considerations.

When it comes to risk management, CFOs play a significant role in their organizations. They are responsible for identifying, evaluating, and managing financial and operational risks, among those risks are IT and cybersecurity threats.

The more integrated and reliant on the internet an organization is the more it is susceptible to data breaches and cyber attacks. The decisions to move aspects to the cloud, might have been driven by efficiencies and cost savings, as well as access to new services they can sell to clients. However doing so has presented new challenges, new risks that also need to be solved for. Especially when considering that a single attack can significantly set back an organization. Investments in advanced security technologies, regular threat assessments, and cyber insurance can all help mitigate the risks cyber crimes pose.

When using technology to drive digital transformation, CFOs need to collaborate closely with the Chief Information Security Officer (CIO) and other executives to ensure that digital initiatives are implemented successfully and provide the expected benefits. This involves overseeing the digitization of various business processes and operations to improve efficiency, productivity, and customer service.

Ensuring that your IT provider complies with various financial regulations and data protection laws is also an essential element of mitigating risks. This includes rules such as Sarbanes-Oxley (SOX) for financial reporting, the General Data Protection Regulation (GDPR) for data privacy, and the Payment Card Industry Data Security Standard (PCI DSS) for payment card security.

Failure to comply with these regulations can result in hefty fines, legal repercussions, and damage to the company’s reputation.

Tips For CFOs Managing Cybersecurity Risk

As the financial stewards of the company, CFOs play a pivotal role in company-wide decision-making. Their deep understanding of the company’s financial situation allows them to make informed strategic decisions aligning with its broader goals.

With the increasing prevalence of cyber threats, CFOs also take on the responsibility of managing cyber risk from a financial perspective.

Cyber Risk Assessment And Identification

One of the very first steps is to perform a comprehensive risk assessment of the organization. This will help identify areas that will need to be addresses. In some cases it might require investments in IT, but there are also many cases where training or simple changes to configurations of IT infrastructure are needed.

Collaboration between teams and in some cases, with team members will produce the most comprehensive assessments. Often IT staff or Software programers, know where organizations are most vulnerable to attacks. Once you have done an assessment and identified where the holes are, create a plan of who, what, and when the items will be corrected. It is also best practice to conduct regular risk assessments to identify and understand the organization’s cybersecurity posture as it evolves. It may go without saying but you should look at the organization globally when setting out to have an assessment done. Create a plan and include the various elements of the business for potential cyber threats on financial operations, data security, regulatory compliance, and overall business continuity.

Establish Robust Cybersecurity Policies And Procedures

Develop and implement robust cybersecurity policies and procedures aligned with industry best practices and regulatory requirements. Ensure clear guidelines on data handling, access controls, incident response, and employee awareness training. Establish protocols for regular software updates, patch management, and encryption to fortify the organization’s defenses against cyber threats.

Then codify these procedures in writing. Consider adding some basic and universal items in your organizations employee manual. For team specific procedures, create a manual for each team and have a copy available on the wall. For some informational items, it might be a good idea to post in the break room along with other posted company material. A couple examples might be policies regarding passwords and sharing. Or a sheet explaining various types of cyber attacks so employees are aware of the angles cyber criminals take to gain access to IT systems.

Invest In Cybersecurity Tools And Technologies

Where needed, allocate resources for advanced cybersecurity tools and technologies to bolster the organization’s defense mechanisms. Invest in firewalls, intrusion detection systems, endpoint protection, and install antivirus & anti-malware software. Consider segmenting your network into smaller parts, doing so can isolate and limit the potential impacts of a breach. Ensure you have a way to backup your data, either in the cloud or on a device in the office if applicable.

Leverage technologies such as AI-driven threat detection and behavioral analytics to proactively identify and mitigate potential cyber threats.

Cyber Insurance And Financial Protection

Reach out to your Insurance company to ask if they offer cyber insurance. Collaborate with your agent to understand what would need to be covered, and what requirements they might have in order to bind that policy. Cyber insurance can provide financial protection against potential liabilities, data breaches, legal costs, and business interruptions caused by cyber incidents. Work with insurance providers to ensure comprehensive coverage aligned with the organization’s risk profile. Taking a more collaborative approach will provide greater assurance that the cyber insurance policy will be tailored to the organization’s needs.

Third-Party Risk Management

Establish stringent protocols for managing third-party vendors and partners with sensitive data or systems access. Ensure all vendors that have access to your systems comply or attest to complying with the procedures you set out.

Conduct thorough due diligence on third-party cybersecurity practices, contractual obligations, and compliance with security standards. Implement contractual clauses requiring vendors to uphold robust security measures.

In some cases such as with HIPAA, your third party partners may need to be listed as business associates and also subject to assessments of their operations. Know what laws and regulations apply to the work you do, and seek guidance on how that might apply to businesses you work with.

Incident Response And Business Continuity Planning

Develop a comprehensive incident response plan in collaboration with IT and cybersecurity teams. Define clear procedures for responding to cyber incidents protecting financial data breaches, ransomware attacks, or system compromises.

Additionally, ensure the organization has a robust business continuity plan to minimize disruptions and mitigate financial losses in cyber defense.

Regulatory Compliance And Governance

Stay abreast of evolving cybersecurity risk management and regulations and compliance requirements relevant to the industry.

Ensure the organization adheres to regulatory standards such as GDPR, HIPAA, or PCI DSS. Foster a culture of compliance by establishing a governance framework that includes regular audits, risk assessments, and compliance monitoring.

Employee Training And Awareness

Employees play a crucial role in preventing cybersecurity attacks, but if they don’t know or if they perceive the company is indifferent to cyber threats, they will not take the steps necessary to safeguard the organization’s data . Conduct regular training sessions to educate employees about cyber threats, phishing attacks, social engineering, and safe digital practices.

Foster a cybersecurity awareness and accountability culture throughout the organization to mitigate human error-related risks.

Continuous Monitoring And Threat Intelligence

Implement robust monitoring systems to assess the network for potential threats and vulnerabilities continuously. Utilize threat intelligence platforms to gather information on emerging cyber threats and vulnerabilities.

Proactively identify and mitigate risks by staying ahead of evolving cyber threats through continuous monitoring and threat intelligence analysis.

Collaboration And Integration Across Departments

Facilitate cross-functional collaboration between finance, IT, cybersecurity, legal, and other relevant departments.

Foster a collaborative environment to align cybersecurity initiatives with financial strategies and overall business objectives. Integrating cybersecurity considerations into financial planning ensures proactive risk management from a holistic perspective.

TAG Solutions can help CFOs navigate the complex landscape of cyber risk management by providing expert guidance and support. Our team of cybersecurity professionals can assess your organization’s risk profile, develop tailored strategies, and implement effective solutions to mitigate cyber threats.

Conclusion

In conclusion, cyber risks substantially threaten organizations of all sizes and sectors. These risks can result in substantial financial losses, damage to reputation, regulatory fines, and even operational disruption. Failure to adequately manage cyber threats can jeopardize an organization’s financial stability and overall business continuity.

Continuous monitoring and proactive risk management strategies strengthen organizations’ cybersecurity posture. TAG Solutions supports financial leaders in implementing effective cyber risk management strategies. So, invest in cybersecurity measures today to secure your organization’s future.