Companies around the world expect to boost their cybersecurity investments by 34% in the next fiscal year, after raising them by 17% the previous year, according to a just-released study covering 467 firms across industries and based in 17 countries. About 12% of companies surveyed plan to bolster their cybersecurity investments by over 50%.
These increases come in the face of growing annual losses from cyberattacks, which for companies surveyed averaged $4.7 million in the last fiscal year—with more than one in ten firms losing over $10 million. That average loss equates to 0.114% of revenue across all firms surveyed. Losses are more severe for mid-sized companies than for large and very large companies, which have already taken greater action to secure their businesses.
Many executives believe that their cybersecurity investments are paying off. Firms report a decline in the impact of untrained staff, social engineers, and unsophisticated hackers over the last nine months. The survey shows that the impact of cyberattacks from malware, phishing, and mobile phone apps also decreased over that period, yet the escalation in overall reported cyber losses highlights that cybersecurity is an ever-evolving struggle, as hackers target not just individual companies but whole industries, searching for any vulnerability.
Although the impact from certain types of attacks has decreased, the survey shows a rise in others, such as incursions through company supply chains and ecosystems.
“This is an example of what we call the ‘balloon effect’ in cybersecurity, where squeezing down on risks in one place causes others to appear elsewhere,” said Lou Celi, ESI ThoughtLab’s chief executive officer. “Thanks to improved cybersecurity, companies are more effectively mitigating risks from unintentional and less sophisticated threat actors, but more advanced adversaries are still finding a way in.”
The research shows that to combat evolving risks, companies need to take a proactive, multi-layered defense. Firms are responding by allocating the biggest share of their budgets to technology while seeking the right balance between investments in people and process. They are also focusing more on risk identification to address emerging vulnerabilities and are investing more in resilience to ensure they can respond quickly to successful attacks.
Basic recommendations that came out of the study include:
- Make sure you are investing enough in cybersecurity. Some industries, such as media and consumer markets, are allocating less and may be more exposed to cyber risks.
- Think of cybersecurity like any other existential threat to your business. The risks are not just about privacy, liability, and stealing data; they also can create huge operational risks if business is interrupted and can have reputational impacts that can hurt market positions.
- Pay attention to risks from partners and your supply chain. As firms draw on ecosystems of third parties to drive digital transformation, they increase their vulnerabilities to cyber risks.
- Be aware that legal and regulatory risks are also rising substantially. Companies that do not comply with new standards face hefty penalties and legal consequences.
- Implement rigorous incident training. To do so, put key stakeholders through a strong scenario exercise to prepare them for events when they occur, and to plan on how to respond quickly.
- Measure your full losses, costs, and returns. When hit by a successful cyberattack, you need to understand all your costs—direct and indirect, tangible and intangible.
ESI ThoughtLab and WSJ Pro Cybersecurity carried out the survey in the spring of 2019 as part of a global research initiative titled The Cybersecurity Imperative. The current survey is a follow-up to a more comprehensive survey of 1,300 companies conducted in the fall of 2018. The latest survey was developed to track how executives’ investments, plans, and perspectives have changed over the last nine months. Download an executive summary of the results by visiting: https://econsultsolutions.com/esi-thoughtlab/cybersecurity-imperative-2018/
