Board-Level Cybersecurity Discussions Must Be Proactive, Have Substance, and Inspire Real Change

By Gordon Tucker, Managing Director
Technology, Media and Communications Industry Leader

 

 

 

Cybersecurity is a hot topic in most boardrooms today. Not a shocking revelation, certainly. But keep in mind that, in many organizations, it has taken a long time for this issue to even become an agenda item for the board. Among them are technology, media and communication companies, which should be helping to set the standard for cybersecurity best practices. Many of these companies are doing that, of course, but others still have a lot of work to do.

While it is good news that more boards of directors are talking about cybersecurity, there is a problem: These discussions are too often prompted by a headline-grabbing data breach or hack that has rattled the business or its peers in the industry. This reactionary approach needs to change if boards and executive management truly want their organizations to be prepared to weather a cyberattack or other disruptive cyber event, and its potential consequenses.

Success in a digitized world hinges on effective cybersecurity

Taking a more proactive view toward cybersecurity will also help businesses to succeed in a digitized and hyperconnected Internet of Things (IoT) world. At the World Economic Forum’s annual summit in Davos, Switzerland, this year, cybersecurity experts discussed how this rapidly emerging world will help businesses to reach new heights of productivity — provided they build effective cybersecurity.

This future is not far off, which is why there is an urgent need for boards and executive management to change how they talk about cybersecurity. They need to focus less on worrying about the potential reputational or financial risks of a single embarrassing cyber incident, like a phishing campaign that targets the CEO, and focus more on helping the business define and develop an overarching set of activities that will help it create a stronger, more resilient security environment.

Board engagement as a cybersecurity success factor

For those boards that still view cybersecurity as primarily an “IT problem” — and they are still out there — Protiviti’s 2017 Security and Privacy Survey presents some findings that should help to change at least a few minds. The research found that organizations that are top performers in terms of adhering to security and privacy best practices have two critical success factors present:

  • Their boards of directors have a high level of engagement in, and an understanding of, information security risks that the organization faces.
  • They have a comprehensive set of information security policies in place, including acceptable use policies, data encryption policies, and social media policies.

One-third of businesses surveyed describe their boards as highly engaged with information security risks. This is a five-point increase from the 2016 survey. Protiviti’s survey report notes that this positive trend “reflects the fact that the [information security] issue is not merely about technology, but rather represents a top strategic risk” for today’s businesses.

Fostering more meaningful discussions

In addition to seeing security as just an IT’s problem, another reason many boards fail to have meaningful cybersecurity discussions is the sheer complexity and tremendous scope of the issue. Technology touches almost every aspect of the business, and cyberthreats that target systems and data are growing in sophistication. IT teams themselves struggle to understand the rapidly evolving cyber risk landscape.

Another problem: Boards are often provided information about cybersecurity risks that is far too technical. Cyber risks and recommended solutions for addressing them are not being described by technology leadership in business terms that the board can swiftly analyze and make decisions on.

In our 2017 Security and Privacy survey report, we recommend that technology leaders take care to clearly communicate relevant security matters to all stakeholder audiences. For boards, in particular, they should provide information in nontechnical terms to the extent possible, and prioritize discussion of issues based on the business risks that each risk poses to the organization.

By the same token, Protiviti’s security experts who authored the survey report advise boards to start “asking more, and more detailed, questions about organizational security efforts.” These questions, which should be posed to business, technology and internal audit leaders alike, should include:

  • Do we know how the company’s critical data is collected, stored and analyzed?
  • What framework or activities does the business have in place, or is it developing, to help protect our data and our intellectual property?
  • How is the success of those activities measured?
  • If the organization experiences a significant breach, what is the response plan?
  • How are employees trained on cybersecurity issues, how often and by whom?

These are just some examples of baseline questions that can help boards at technology, media and communication companies begin to have more productive and forward-looking conversations about cybersecurity with the business. More important, these questions will help to lay the groundwork for proactive discussions about emerging risks around digitization and the IoT — the next major technological challenges that technology, media and communication businesses must be fully prepared to face if they are to survive.

Cybercrime, Brand Damage Among Top Risks for Technology, Media and Communications Companies, Executives Say

gordon-tucker-3By Gordon Tucker, Protiviti Managing Director
Technology, Media and Communications Industry Leader

 

 

 

If improving brand protection isn’t a top-line agenda item in the cybersecurity discussions happening at the highest levels in your organization, it needs to be. In today’s era of lightning-quick social media sharing, brand protection has become even more important — and far more challenging — for technology, media and communications (TMC) companies. Two factors play a role:

  • Expanding use of social media and mobile applications by customers and employees: It is all too easy for outsiders to acquire and misrepresent personal and proprietary information.
  • The relentless tide of cyberthreats: The Identity Theft Resource Center (ITRC) reports that the number of U.S. data breaches reached an all-time high in 2016. Several leading TMC companies were among the businesses hit with high-profile, far-reaching, costly and reputation-damaging breaches last year.

In the face of these realities, including growing public disclosures of data leaks and breaches, many TMC companies are beginning to re-evaluate how they interact with other organizations and how they safeguard against breaches. Most C-level executives in this industry group also now realize that they themselves could be targets for hackers and other malicious actors seeking to gain access to personal records and other sensitive data.

There is no doubt that TMC executives, in general, are thinking a lot more about brand protection these days. In the latest Executive Perspectives on Top Risks Survey from Protiviti and North Carolina State University’s ERM Initiative, TMC executives ranked the following risks among the top five for their industry group in 2017:

  • Social media, mobile applications and other internet-based applications may significantly impact our brand, customer relationships, regulatory compliance processes and/or how we do business, and
  • Our organization many not be sufficiently prepared to manage cyberthreats that have the potential to significantly disrupt core operations and/or damage our brand.

On the cyber-risk front, it is important for TMC companies to recognize that the customer and financial data they handle are not the only targets for hackers. An organization’s intellectual property (IP) can be even more valuable to some threat actors, including nation states. The loss or theft of IP not only could undermine a company’s ability to compete but damage its brand and reputation in unanticipated ways.

Without question, loss or theft of any type of high-value data can have lasting, negative effects on an organization from both operational and brand perspectives. Everything negative that happens to a company and becomes public can damage its brand – and cyber breaches and loss of IP are some of the fastest ways for this damage to occur. Given these considerations, management and the board must work together to manage the brand and make brand protection one of the company’s top priorities.

To engage in effective dialogue on this topic, a recent issue of Protiviti’s Board Perspectives: Risk Oversight offers some guidance: Executives should take the lead in deciding what type of interaction they would like from the board and define how they want to involve the board in the brand protection process. And if the executives haven’t done this yet, then the board should waste no time in asking for their input.