Increasing numbers of UK businesses are struggling to understand how to combat cybercrime, putting them at increased risk of cyberattacks resulting in crippling costs such as multi-million pound ransoms, litigation and reputational damage, according to a new report published today.
The report – Effective Board Governance of Cyber Security: A source of competitive advantage – is published by Savanti, one of the UKs leading cyber security consultancies.
The report highlights that global cyberattacks increased by 38% in 2022, compared to 2021. In terms of numbers, across all UK businesses, there were 2.4 million instances of cybercrime in the last 12 months. According to Cybersecurity Ventures, the cost of cybercrime to business could reach £8.4 trillion annually by 2025 and if it was measured as a country, cybercrime would be the world’s third-largest economy after the US and China.
High profile recent incidents include the cyberattack on the Electoral Commission, where a breach undetected for 14 months resulted in access to voters’ personal data including home addresses, images, email addresses, names and telephone numbers, as well as cyberattacks on companies including British Airways and Boots where employees’ personal data, including bank and contact details, were accessible.
The report says that although boards are increasingly concerned about cyber security, ranking it as one of their top priorities, many struggle to understand what to do, with the majority (59%) of directors saying their board is not very effective in understanding the drivers and impacts of cyber risks for their organisation.
But the report says large enterprises with digitally-savvy, cyber-engaged executive teams have significantly higher revenue growth, valuations and net margins and effective cyber security also brings many top line benefits, including greater success rates when tendering for new clients, improved data insights, investor confidence and maintenance of share-holder value during mergers and acquisitions.
The report makes a number of recommendations for boards to take, including having at least one board member with direct experience of cyber security issues; putting cyber security as a topic to be discussed at least on a quarterly basis at board meetings; and understanding how long it would take to recover from a disruptive cyber-attack such as ransomware.
Richard Brinson, CEO of Savanti, said:
“Many investors see cyber as the canary in the coal mine for the health and resilience of a business – if a company can demonstrate effective cyber preparedness, it is a sign of the strength of their overall leadership, operations and governance.
“But while there has undoubtedly been progress in recent years on board governance of cyber security, many boards struggle to dispense their responsibilities.
“We found many board members don’t understand their unique role on cyber security, lack the right level of cyber awareness and are scared to turn to their Chief Information Security Officer to bridge this gap, for fear of exposing their lack of understanding.
“Our report makes several recommendations as to how boards can address this. For example, it’s second nature to have finance and HR representation at board level, yet despite the growing risk of cyberattack, knowledge of cyber issues are at best under-represented, and at worst ignored.
“Having at least one director with experience in, and capable of speaking at board level on cyber security would make a huge difference. More regular discussion of cyber issues at board meetings is also vital – for too many it’s just an add-on that’s discussed briefly once a year.”
The report also recommends boards take action to get ahead of the game on cyber regulation.
Mr Brinson added:
“Many boards have their heads in the sand on cyber regulation. In the US, the Securities and Exchange Commission adopted rules in July requiring public companies to disclose within four days all cybersecurity breaches that could affect their bottom lines. It seems likely more cyber regulation will emerge in the coming years in the UK and Europe that will eclipse the current GDPR reporting rules.
“Businesses need to get ahead of the curve. This means requirements for boards to report on relevant expertise at board and senior management level on cyber security, report on risk management arrangements and disclose all material incidents to the relevant public authority to build a more comprehensive shared picture of the emerging threat.”
To learn more, visit www.savanti.co.uk.