As corporate boards recognize the significant increase in cybersecurity attacks on businesses, they are beginning to focus on various aspects of digital risk. In a Gartner survey, 67 percent of board members interviewed highlighted digital as a significant challenge for 2020 and 2021. Some directors also emphasized the need to minimize compliance, legal, and reputational risk associated with digital infrastructure.
For the boards of directors, the reduction of digital risk is a top priority. Thus, companies are formulating comprehensive digital risk management strategies aimed at protecting operational viability. These strategies focus on third-party technology, such as operational technology, artificial intelligence, and machine learning.
The same applies to digital services and products facilitated by mobile, big data, cloud, and social data. Organizations can track risks using key integration points, such as social media surveillance, cloud access security brokers, mobile device management, and information governance. Some vendors are rolling out solutions capable of integrating with several digital risk monitoring subsystems.
Krystal Triumph provides IT support in Philadelphia and provides consulting to corporations across the mid-Atlantic region on digital risk provides insights on cybersecurity and cyber protections,.
The significant uptick in high-profile cyberattack incidents has prompted urgent responses from lawmakers and business leaders. Bad actors are stealing sensitive information in record-breaking cyber breaches. These attacks affect organizations in various sectors, including healthcare, government, retail, and online betting.
Cybersecurity experts predict that the costs of breaches will reach $3 trillion annually by 2021. This figure represents staggering financial losses for businesses of all sizes. One of the most notable high-profile breaches is the 2017 attack on Equifax. Cybercriminals gained access to credit card, social security, and driver’s license details of 145.5 million Americans.
The event also highlighted the reporting requirements for cybersecurity breaches. It took Equifax several months to report the attack. The breach emphasized the need for board members to adopt a more proactive oversight approach to digital risk.
Experts agree that cybersecurity is now a business-critical matter that directors should consider a core business issue. Elevated oversight enables business leaders to quantify digital risk and formulate effective strategies to mitigate the risk.
Types of Digital Risk
Digital risk comes in various forms and impacts business operations in different ways. Business leaders need to familiarize themselves with these risks to develop viable countermeasures. Some types of digital risks include compliance risk, automation risk, data privacy risk, workforce risk, and cybersecurity risk.
Criminals target businesses of varying sizes to access sensitive data, which they may sell on the dark web. In some cases, bad actors use the stolen information to commit malicious acts, such as extortion, disrupting business operations, or causing reputational damage.
When it comes to automation risk, organizations face a wide array of issues like compatibility complications with other tech solutions. Businesses may also experience challenges associated with governance or the lack of resources,
Workforce risk encompasses staffing problems that can compromise the company’s capacity to achieve strategic objectives. These risks include high employee turnover or skill shortages.
These risks emanate from relationships with service providers or third-party vendors. For instance, partnering with a service provider may trigger risks linked to customer information, intellectual property, operations, data, and the exposure of other sensitive information.
Many companies face stringent regulatory compliance requirements that apply to new technology. Organizations need to remain vigilant to avoid risks associated with non-compliance. Regulatory standards can apply to data retention, cybersecurity, operations, and other business practices.
For this reason, the board of directors should pay attention to the risk of breaches that compromise the security of sensitive customer or business data. The information may incorporate login credentials, medical records, credit card details, full names, and physical addresses.
Hackers can exploit system vulnerabilities and expose sensitive data, thus compromising an organization’s compliance with relevant standards.
When it comes to resiliency risk, board members must recognize the risk of adverse events during the implementation of new technology. Companies may face considerable difficulties when attempting to curtail the damage caused by such events.
Managing Digital Risk
To manage digital risk, board members should adopt specific measures designed to maximize oversight, control, and regular reporting.
Some of the best practices that help mitigate risks include:
- Implementing a breach response protocol
- Conducting internal audits
- Regular reporting and testing
- Bolstering cybersecurity expertise
- Monitoring for unwanted exposure
- Recognizing the business-critical nature of cybersecurity
- Identifying essential technology assets and potential threats
- Establishing a disclosure committee
Breach Response Protocol
Every business needs to establish a breach response protocol that incorporates input from multiple business units. The protocol lists the incident response team, an action plan, the forensic process, and the disclosure steps. Once the development of the protocol is complete, it needs the approval of the board.
The breach response protocol outlines team members’ responsibilities and how the organization discloses the event to stakeholders.
Identify Potential Threats
Gaining an in-depth understanding of the threats faced by your organization is a critical step in managing digital risk. In doing so, you can establish robust countermeasures to detect and thwart potential attacks. IT experts recommend deploying frameworks that enable team members to learn how different types of threats work.
In most cases, attackers focus their efforts on the shortest path that requires minimal effort to reach the desired goal. Thus, many hackers take advantage of exposed login credentials to gain unauthorized access to your system.
Conduct an Internal Audit
Effective digital risk management starts with identifying critical assets. You need to assess the potential threats that may compromise the security of the assets. Examples of essential IT assets include servers, business applications, payment processing systems, and websites.
Bolster Cybersecurity Expertise
The board of directors needs one or more members with expertise in technical cybersecurity issues. Directors play an oversight role in the matters. Hence, the urgent need to incorporate tech-savvy board members. The directors assess technical issues in line with the organization’s overall risk management strategy.
Publicly traded firms should comply with the Cybersecurity Disclosure Act of 2019. This law requires disclosure regarding the cybersecurity expertise of board members. Thus, companies must take appropriate steps to introduce members with relevant expertise.