As cyberattacks increasingly threaten information assets in organisations, the lines between an information security risk and a business risk are blurred. Information security becomes a deciding factor in influencing the survival and success of your business. Protecting your information means protecting your business.
Let’s discuss how cyber risks impact your financial stability, operations, strategy, compliance, and reputation and why aligning security goals with business objectives can make your organisation more secure, not just compliant.
This article covers:
Understanding your business drivers
Your business operates within a framework defined by various factors that shape your strategic decisions and resource allocation. For example, regulatory compliance demands strict governance processes to ensure laws are followed, while technological changes might require updates to manage digital transformations.
Regulatory compliance, market competition, technological advancements, customer demand, and cost-efficiency goals are all business drivers that shape your organisation's Information Security Governance (ISG).
ISG helps protect critical information assets, ensuring confidentiality, integrity, and availability (CIA triad). It builds on corporate governance principles, using clear policies and procedures to keep you accountable, transparent, and proactive in managing risks. However, ISG can only be as good as your organisation's general governance.
Corporate governance involves systems, principles, and processes that promote accountability, fairness, and transparency with stakeholders. It’s steered by a mix of the board of directors and executive management through ongoing processes and specialised committees. This goes beyond compliance with known information security standards like ISO 27001 and fosters ethical leadership, sustainability, and enhanced business performance.
Why security goals and business goals need to align
Aligning security goals with business goals means recognising that information security risks impact business objectives. If we take a data breach, it can lead to financial losses, operational disruptions, strategic setbacks, compliance failures, and reputational damage.
Consider a retail company that experienced a data breach. Financially, it faced millions in remediation costs and legal fees. Operationally, it had to shut down its online store, disrupting sales. Strategically, competitors took advantage of its weakened position. Compliance-wise, it faced penalties for failing to protect customer data. Reputationally, customer trust dropped, leading to a loss in long-term revenue.
These interconnected risks show the need for a holistic approach to risk management, where security measures support business objectives and mitigate potential impact across the organisation. You’re secure and make money when your risk control matches your business model; that’s the bottom line regarding adequate information security.
Why information security risks are business risks
Different operational, legal, and financial risks stem from various vulnerabilities and impact multiple stakeholders. Everyone in the company must be involved in integrating information security across all organisational layers. Organisations are typically hierarchal, so they must first come from the top executive level.
Here’s how information security risks turn into business risks:
Financial losses
A data breach caused by a cyberattack can drain your finances. Remediation costs, legal fees, potential fines, and lost revenue add up quickly. For example, the Marriott hotel chain faced a data breach in 2018 that exposed the personal information of over 500 million guests. This incident cost Marriott $18.4 million in fines from the UK Information Commissioner’s Office (ICO). The financial impact extended beyond immediate costs, affecting the company's stock price and long-term profitability.
Operational disruptions
Cyberattacks can heavily disrupt day-to-day business operations. Ransomware can lock your systems, halting production and services. Take the 2021 Colonial Pipeline ransomware attack as an example. It forced the company to shut down its fuel pipeline operations for several days. This disruption led to fuel shortages across the East Coast of the United States, highlighting how cyberattacks can paralyse critical infrastructure and operations, resulting in significant economic and logistical challenges.
Related: Cyber security & supply chain risk management: Mistakes & best practices
Strategic risks
Cyber threats compromise your strategic position. Stolen intellectual property or trade secrets can affect your competitive edge. For example, right in the middle of the pandemic, as pharmacy companies were competing to be the first to launch the COVID-19 vaccine, Pfizer/BioNTech vaccine docs were hacked from The European Medicines Agency (EMA). While no significant damage was reported, it could have seriously threatened the pharmaceutical giants’s vaccine timeline, reputation and finances.
Compliance issues
Failing to protect data leads to penalties. GDPR fines can reach up to 4% of annual global turnover or €20 million, whichever is higher. British Airways faced a £20 million fine in 2020 for a data breach affecting over 400,000 customers. These fines illustrate the substantial financial penalties organisations face for non-compliance with regulations, stressing the need for robust security and compliance strategies.
Reputational damage
Reputational damage erodes customer trust; a single breach can harm your brand. Consider the 2021 Facebook data leak, where the personal data of over 530 million users was exposed online. Ireland’s Data Protection Commission hit Meta with a €265 million fine. But even worse, this incident raised serious privacy concerns among users. It led to increased regulatory scrutiny, significantly damaging Facebook's reputation and prompting discussions about user data protection and privacy standards.
These examples illustrate information security risks' pervasive and multifaceted impact on financial stability, operational integrity, strategic positioning, compliance obligations, and reputational trust. Addressing these risks requires a comprehensive and integrated approach to information security that aligns with broader business objectives.
How to balance business risks with information security
Integrating information security into your business strategy keeps your operations, finances, and reputation intact. You can achieve this balance through effective information security governance, risk management, standards, and a strong information security culture.
The role of Information Security Governance (ISG)
It starts with ISG and top management involvement. Senior management and the board must get involved and take responsibility for making information security work. They should lead by example, provide the necessary resources, and set up a clear system to oversee everything. Information security should become a natural and visible part of the company's strategy.
Related: Organisational security changed: How to adapt as an IT leader
Meanwhile, ISG itself works as your information security blueprint, a framework that helps align information security strategies with your business goals. ISG includes policies, procedures, and controls designed to protect your assets and manage risks. For example, if you’re a consulting company, you might establish an ISG framework that addresses data protection policies, regular security audits, and incident response plans to keep customer information secure.
Think risks first
What could completely shut down your organisation? Think about those critical assets and risks first. That’s precisely why you must blend security into your overall business risk management. This way, your security measures support your goals. For example, if you’re a financial institution, you might focus extra on protecting customer transaction data and setting up fraud detection systems to stay ahead of threats. Tackle your most pressing risks and go from there. You’ll get both compliance and security in return.
Foster an information security culture
To quote Peter Drucker, "Culture eats strategy for breakfast." This statement stresses how deeply organisational culture influences the success of any strategy, including information security.
Organisational culture, shaped by shared values and norms, influences how employees work and face challenges. It can either help or hurt your organisation’s governance efforts. For information security governance to be effective, it must align with and strengthen the company’s culture, making security practices truly integrated and consistently applied.
Related: Prevent social engineering attacks: 3 strategies for IT-leaders
Aligning security efforts with a culture of openness and teamwork can improve their acceptance and effectiveness. As a CISO, you must understand your organisation's culture to create security strategies for compliance and cultural needs. This alignment makes security a shared value and responsibility, embedding it into the company’s core.
Follow information security standards and frameworks
Using standards like ISO 27001 helps build a solid information security management system (ISMS). It provides a structured approach for managing risks and complying with regulations. It helps meet legal requirements and strengthens overall security practices within your organisation.
You can also follow the guidelines defined in the NIST Cybersecurity Framework 2.0 (CSF 2.0). Now, with the addition of ‘Govern’ to the NIST wheel, information security is integrated into the business structure and is a dynamic project.
‘Govern’ in NIST covers Organisational context, Risk management strategy, Roles and responsibilities, and Policies and Procedures. The function integrates information security into corporate governance, supporting long-term sustainability and resilience.
Senior management and the board must actively engage in and be accountable for information security governance. They must provide leadership, resources, and a clear oversight framework to make information security a transparent part of overall enterprise governance.
Take a hybrid approach: build a digital ISMS with experts
Is your Information Security Management System (ISMS) still in spreadsheets? You’re better off with a modern digital ISMS built on one dedicated platform. All your risks, assets, and security questionnaires are there to see and manage. And if you combine building your ISMS with expert guidance – you’re getting the best of both worlds. You’re building your ISMS right from the get-go for full compliance and security.
How DataGuard can help you
Risk management, asset management, policies, employee training, and security questionnaires – we’ve got all the features you need in one security platform, plus you’re guided by information security experts. You can build your ISMS from scratch for robust risk management that leads to compliance and security all at once.
Frequently Asked Questions
What is cyber risk?
Cyber risk is the potential for financial loss, operational disruption, or damage resulting from the failure of digital technologies used for informational or operational functions in a manufacturing system. This risk arises from unauthorised access, use, disclosure, disruption, modification, or destruction of the system via electronic means.
Why is cyber risk a business risk?
Cyber risk is a business risk because it directly impacts a company's operations, financial health, and reputation. A successful cyberattack can lead to significant financial losses from fines, remediation costs, and lost revenue. It can also disrupt business operations, leading to downtime and reduced productivity. Furthermore, cyber incidents can damage a company's reputation, causing a loss of customer trust and potential market share.
Why is information security a risk?
Information security is a risk because it involves protecting data and information systems from unauthorised access, use, disclosure, disruption, modification, or destruction. If these security measures fail, sensitive information can be compromised, leading to financial loss, legal consequences, and reputational damage. Organisations must constantly update and manage their security measures to protect against evolving threats.
What is the risk of security in business?
The risk of security in business refers to the potential negative outcomes resulting from inadequate security measures. This includes financial losses due to theft or fraud, operational disruptions from system outages or data breaches, legal penalties for non-compliance with regulations, and damage to the company's reputation. Businesses must proactively manage these risks by implementing robust security practices and regularly reviewing their effectiveness.
What is information risk in business?
Business information risk refers to the potential for loss or damage when information confidentiality, integrity, or availability is compromised. This can occur due to cyberattacks, human error, or system failures. Managing information risk involves identifying and mitigating vulnerabilities, ensuring data protection, and maintaining compliance with relevant regulations to safeguard the organisation's critical information assets.
