Businesses neglect risk management at their peril

In an economic downturn, firms need to increase the effectiveness of their information risk management as early as they can. But those that seek to cut the cost of their risk management activities are accelerating their own possible demise.

In the current climate, the last thing managers need is a data security disaster getting in the way of winning or holding on to business. Today companies of all sizes are exposed to computer security breaches. And with the average cost of a security breach between £10,000 and £20,000, that’s exposure that few leaders can afford.

Electronic attacks are now largely automated, seeking out unprotected targets online and finding and attacking unprotected connections within minutes. Highly sophisticated and equally automated threats lurk on web sites across the internet, within emails and in the physical world.

Information security is an increasingly important boardroom topic, regardless of the economic conditions. That is being driven by three factors. Data protection concerns are causing a proliferation of legislation and regulation; the rise of cybercrime is intensifying the need for firms to take appropriate steps to protect their valuable information assets; and financial regulators are ever more interested in the robustness of companies’ financial records.

Faced with the combination of challenging operating conditions and such compliance strictures, robust risk identification and management is becoming an indispensable component of any company’s survival strategy. Continuity plans must be drawn up to militate against business disruptions ranging from power cuts to system or supplier failures.

In a downturn, financial failure is a significantly enhanced risk for most businesses. This risk should be analysed in detail, early in the down cycle and new or improved controls put in place to mitigate the risks. Those firms with an effective and robust corporate governance regime will already know this and their risk reviews will be well advanced.

Alan Calder is a BCS distributor