Recent headlines carry an alarming message - the threat of cyberattacks poses a growing risk to companies' financial health. There is a rise in the average cost per cybercrime report to over $39,000 for small businesses, $88,000 for medium businesses, and over $62,000 for large businesses. An average increase of 14%. In the ACSC Annual Cyber Threat Report 2022, medium-sized businesses had the highest average loss per cybercrime.

What Exactly Are Cyber Risks?

Simply put, cyber risks refer to the potential for loss or damage from a cyber-attack or data breach. This encompasses not only direct financial losses, but also reputation damage, disrupted operations, legal liabilities and more. For example, a ransomware attack could result in stolen customer data, a $2 million ransom demand, three days of downtime, and a 25% dip in customer retention following negative publicity.

The Connection between Cyber Risks and Financial Health

Recent surveys highlight the scale of concern around cyber risks. According to Deloitte's 2023 Cyber Risk Survey, 80% of executives feel cyber risks are a top threat to stability. Why? A breach can have cascading financial impacts like:

- Direct theft of funds

- Fines and legal penalties

- Plummeting sales and share price

- Costly recovery efforts

Reputational harm and loss of consumer trust also take a heavy toll. Moreover, investors now see cybersecurity as a barometer of stability. Robust defences support confidence and valuation, while breaches erode both.

Three key ways Organisations Can Mitigate Cyber Risks

Fully preventing cyber-attacks is likely impossible, but organisations can implement strategies to substantially reduce risks and strengthen financial resilience:

1. Invest in cybersecurity tools and training.

Install firewalls, encryption and intrusion detection systems. Conduct phishing simulations and cyber awareness training to engage employees. Promote a culture of security.

2. Develop and test incident response plans.

Have plans to rapidly detect, contain, and recover from attacks. Run response simulations to refine procedures and minimise potential damages.

3. Manage third-party security risks.

Assess security measures of vendors, suppliers, and partners. Include cyber risk clauses in contracts and monitor third-party access.

While cyber threats will continue to evolve, organisations can take proactive steps to safeguard their financial stability for the long-term. Assessing cyber risks, dedicating resources toward defence, and establishing robust incident response plans are key. With cyber risks now tightly intertwined with financial risks, building organisational resilience must be a strategic imperative.