The CFO’s Role in Cyber Security

Artificial Intelligence (AI), Blockchain, Robotics, 3D Printing, Cloud Computing, Internet of Things (IoT), Mobile, Advanced Analytics among others are some of the new technologies making waves in the technology space. The rate at which technology is evolving is alarming to such an extent that if you’re a player in this field you have to constantly be on top of your game otherwise if you sleep you snooze.

Love them or loathe them, technological breakthroughs have created a world that is always connected, continuously innovating and constantly challenging conventional wisdom. For example, new computing power in the form of customer analytics is enabling businesses across all sectors to interact 24/7 with their customers, understand consumer behavior like never before and deliver unique customer experiences that yield results.

Current digital capabilities are disrupting traditional business models and presenting valuable opportunities to streamline processes, improve efficiency, free up resources, sharpen data analysis and improve business performance. Taking these benefits into account and others, CFOs are leading their companies on exciting digital transformation journeys.

It is true that technology is empowering us to perform our jobs better and achieve more with less. However, I get concerned when all we talk about is only one side of technology – benefits.

In the midst of all the promises and excitement brought by these “new shiny” tools, we are forgetting the heightened risks that also come along, which if not closely monitored and addressed have increased potential to bring the business down to its knees overnight. As organizations continue to increase their reliance on new technologies to drive strategic performance, new risks to data security and confidentiality are sprouting.

This automatically elevates the need to protect customer and employee data, as well as confidential information from third parties and business partners. The consequences of failing to do so are not only financial but also intangible – lost customer confidence and reputation damage.

CFOs have a critical role to play in enhancing and strengthening their companies cyber security programs. In the past security responsibilities have fallen under the radar of the IT manager. However, an increase in data breaches and cyber attacks are elevating cyber security to the boardroom resulting in the CFO taking over the mandate.

The good thing though is that Finance owns majority of the data generated and used in the business. Secondly, Finance is responsible for performance reporting and analysis and CFOs have a bird’s eye view of the business and the market. Because of these two advantages, CFOs have better knowledge and understanding of where sensitive information is stored at all times, how it is secured, who has access to it, potential perpetrators and how they can get access to the information.

The problem in many companies is that cyber security becomes an imperative only after a breach has occurred. Just because you have not experienced a cyber breach or attack does not necessarily imply that you should give yourself a false sense of security. If you believe that your network is secure or you are a small company therefore immune to cyber breaches, think again.

These days cyber criminals are becoming more and more sophisticated and repeatedly aim to stay a couple of steps ahead of their victims. Most attacks are discovered a couple of months or years later from the date of initial breach. A case in point is the attack on the shipping company Svitzer, which is part of the Maersk Group. Sensitive personal information of around 500 employees in Australia where the attack happened was affected.

Perpetrators got access to email addresses of 3 employees and for 11 months (May 2017 – March 2018) they secretly auto-forwarded between 50 000 and 60 000 emails outside the company. Accounts in Finance, Payroll and Operations were affected. The perpetrators were smart enough to introduce supporting rules that deleted the forwarded emails to prevent the compromised account owners see that their emails were being forwarded.

With the speed and complexity of the threats changing on a daily basis, CFOs must take action and a play leading role in helping their organizations fight against cyber crime. As a CFO:

Acquire knowledge on cyber security. If the CFO is expected to take the lead in assessing and advising the board on cyber security issues, how best is (s)he going to do so if (s)he lacks an understanding of the risks and potential impacts of a breach. Lack of understanding leaves valuable information exposed. It is therefore critical that the CFO acquires knowledge on different types of attacks, impact on brand value, how to prevent the attacks, and also how to respond in the unfortunate event of an attack. Also, when the CFO has detailed knowledge of cyber security, (s)he is able to lead the discussion and provide training to the board so that they get working knowledge and understanding of cyber security to provide appropriate oversight.

Map and classify your organization’s data. In a world where companies are operating more than one financial and operations system, with each system containing sensitive stakeholders and financial performance information, risks abound. You need to understand how your organization’s data supply chain functions as well as how the information flows across your entire network of systems. Developing this understanding will help you take a digital inventory of your data and locate critical information in need of most protection since it is impossible to protect everything.

Carry out regular vulnerability assessments. It is common practice to install antivirus or any other form of software to protect ourselves from an attack. Unfortunately, this is not enough. Cyber security goes beyond installing software hence the need to assess any weaknesses and risks attached to your systems. One way of doing so is employing the services of ethical hackers who will actively try to intrude or penetrate into your systems and recommend effective internal controls. It’s important to be proactive and continuously evaluate current detection tools.

Build cyber security into the culture. One way cyber criminals make their way into company systems is via employees by sending them click bait emails. In the event that an employee lacks knowledge of cyber attacks, by clicking on the link he or she is exposing the entire group to a destructive attack. Educating and training employees on cyber matters helps build awareness. Additionally, employees should be encouraged to share information about a breach, this improves the organization’s ability to detect and respond to attacks of a similar nature. Although the CFO carries the overall responsibility of reporting to the board on cyber security issues and initiatives, it is still everyone’s job to detect and report possible attacks. Thus, cross-functional collaboration is necessary.

Don’t ignore third party risk. Business partners, vendors and other third parties hold important data on behalf of the company. An example would be where your company has outsourced specific Finance functions to a low-cost service provider, or you have engaged a marketing agency to handle your product marketing strategy. If this data is to fall into a wrong pair of hands, your company will have to answer for that. Why? Because the company is accountable not just for data stored in-house but also data held by third parties. CFOs must therefore regularly conduct an assessment of third party risks and evaluate third party’s data management processes. This will shed light on whether the third parties are protecting data with same rigour as their own company.

Develop an incident response plan. Data breaches occur even to the highly secured organizations. What is required is having a response plan developed before the breach takes place to avoid making panicky and bad decisions. The plan should define what is considered a cyber security incident, and provide a clear guide map or process steps to follow when an incident happens. Also, the plan should have clear decision-making guidelines including a robust communication framework. You don’t want to find yourself scrambling to assign roles and responsibilities in the heat of the moment. Regular practice and testing of your response plan is a must. This will inform you in advance if your plan is usable or overly complex.

In conclusion, the mere fact that your organization has not been subjected to an attack doesn’t mean that you should shelve all efforts to secure your systems. As long as you use devices, mobile, social and back-office technologies that are connected to the Internet, you are a perfect candidate for a data breach. Don’t let ignorance act as a catalyst for your downfall.

Thanks for sharing:

Leave a Reply

Your email address will not be published.

Subscribe to get notified of new posts by email

Recent Posts

Categories

Leading in Uncertain Times

One of the biggest challenges facing business leaders today is making the right decisions that will ensure their organizations succeed, survive, and remain competitive in an increasingly uncertain and complex environment.

A recent post, The best way to lead in uncertain times may be to throw out the playbook, by Strategy+Business has several good points.

The article is about the COVID-19 pandemic, how global companies navigated through the crisis, and how best to prepare for future disruptions. Here are some key points and my comments.

  • Rather than follow a rigid blueprint, executives must help organizations focus on sensing and responding to unpredictable market conditions.
    • Comment: Senior leaders play a vital role in providing clarity about the organization’s strategic direction, creating alignment on key priorities to ensure the achievement of enterprise objectives, and ensuring the business model is continuously evolving to create and capture value in the face of uncertainty. They must not rest on their laurels and stick to the beliefs and paradigms that got them to where they are today and hope they will carry them through tomorrow. Regulatory changes, new products, competition, markets, technologies, and shifts in customer behavior are upending many outdated assumptions about business success. Thus, the businesses you have today are different from the ones you will need in the future hence the importance of continuously sensing changes in the global economy. Employees and teams often feed off the energy of their leaders and tend to focus their attention where the leader focuses attention. If the leader is comfortable with current business practices and rarely embraces the future or challenges the status quo, then the team is highly likely to follow suit.
  • When it became clear that supply chains and other operations would fracture, organizations began scenario planning to shift production sources, relocate employees, and secure key supplies.
    • Comment: Instead of using scenario planning to anticipate the future and prepare for different outcomes, it seems most of the surveyed organizations used scenario planning as a reactionary tool. Don’t wait for a crisis or a shift in the market to start thinking about the future. The world is always changing. As I wrote in The Resilient Organization, acknowledge that the future is a range of possible outcomes, learn and develop capabilities to map out multiple future scenarios, develop an optimal strategy for each of those scenarios, then continually test the effectiveness of these strategies. This does not necessarily mean that every change in the market will impact your business. Identify early warnings of what might be important and pay closer attention to those signals. In other words, learn to separate the signals from the noise.
  • The pandemic forced the organization’s senior management team to re-examine how all decisions were made.
    • Comment: Bureaucracy has for a very long time stood in the way of innovation and agility. To remain innovative and adapt quickly in a fast-changing world, the organization must have nimble leadership and an empowered workforce where employees at all levels can dream up new ideas and bring them to life. Identifying and acting on emerging threats and potential opportunities is not the job of the leader alone but every team member. To quote Rita McGrath, in her book Seeing Around Corners, she writes, “Being able to detect weak signals that things are changing requires more eyes and ears throughout the organization. The critical information that informs decision-making is often locked in individual brains.” In addition to the internal environment, the leader must also connect with the external environment (customers, competitors, regulators, and other stakeholders), looking for what is changing and how.
  • It’s worthwhile for leaders of any team to absorb the lessons of sense-respond-adapt, even if there is no emergency at hand.
  • Sensing: Treat the far-flung parts of your enterprise as listening stations. The question leaders must ask is, “What are we learning from our interactions beyond the usual information about costs and sales?” Train your people to listen for potentially significant anomalies and ensure that important information is not trapped in organizational silos.
    • Comment: Cost and sales data are lagging indicators that reveal the consequences or outcomes of past activities and decisions. Although this information can help leaders spot trends by looking at patterns over time, it doesn’t help understand the future and inform what needs to be done for the numbers to tell a different story. In addition to lagging indicators, pay attention to current and leading indicators and understand the relationship between these indicators and outcomes.
  • Responding: Improve communication across intra- and inter-organizational boundaries. Leaders should view business continuity as an essential function that acts as connective tissue for the enterprise.
    • Comment: In addition to creating mechanisms that allow the free flow of information both inside and outside the organization, decision-makers should also be comfortable receiving information that challenges their personal view of the world, even if it’s not what they want to hear. Create a culture of psychological safety where people are not afraid to share bad news for fear of getting punished, but rather are acknowledged and rewarded for speaking up. Leveraging the diversity of thought enables leaders to anticipate the future as an organization, decide what to do about it collectively, and then mobilize the organization to do what’s necessary.
  • Adapting: Challenge assumptions, and question orthodoxies. There’s always the temptation to mitigate threats simply by applying existing practices harder and faster. One way to get at those deeper issues and encourage double-loop learning is to ask, “What needs to be true for this to be the right approach?”
    • Comment: In an increasingly uncertain environment, it’s difficult to survive and thrive with an old business model or outdated technologies. Many businesses fail because they continue doing the same thing for too long, and they don’t respond quickly enough and effectively when conditions change. As a leader, stay curious and connected to the external environment, look for market shifts, understand what needs to be regularly refreshed and reimagined, adopt new technologies and capabilities, and adapt in ordinary times but also during times of transition. Unfortunately for many leaders, it’s just more convenient for them to continually downplay the fact that conditions are changing than take the appropriate course of action that drives business success.

How are you preparing your organization for potential future disruptions?

Thanks for sharing:

The Collaborative Organization

These days the term collaboration has become synonymous with organizational culture, creativity, innovation, increased productivity, and success.

Let’s look at the COVID-19 pandemic as an example. At the peak of the crisis, several companies instructed their workers to adopt remote working as a health and safety precautionary measure.

Two years into the pandemic, they are now asking their employees back to the office full time or are planning to adopt a hybrid model.

The need to preserve our collaborative culture and accelerate innovation are two of the top benefits being cited by organizational and team leaders for bringing workers back.

Collaboration is indeed essential for the achievement of team goals, functional objectives, and the overall success of the organization.

Today’s breakthrough innovations are emerging from many interacting teams and collaborative relationships.

When teams, functions, and organizations collaborate, the whole is greater than the sum of its parts; group genius emerges, and creativity unfolds.

But, what makes a successful collaboration? What are the key enabling conditions?

  • It extends beyond the boundaries of the organization. Business success is a function of internal and external relationships. Instead of viewing your business in vacuo, understand that you are part of an ecosystem. External to your organization, who do you need to partner with to enhance your value creation processes, achieve/exceed your objectives, or successfully execute your strategy?
  • Ensure the objectives are clear and there is shared understanding by everyone. Unclear objectives are one of the topmost barriers to team and organizational performance.
  • Foster a culture that encourages opinions and ideas that challenge the consensus. People should feel free to share their ideas and not hold back for fear of others penalizing them or thinking less of them. Collaboration is hindered when one or two people dominate the discussion, are arrogant, or don’t think they can learn anything from others.
  • Groups perform more effective under certain circumstances, and less effective under others. There is a tendency to fixate on certain topics of discussion amongst groups which often leaves members distracted from their ideas. To reduce the negative effects of topic fixation, members of the group should be given periods to work alone and switch constantly between individual activity and group interaction.
  • Effective collaboration can happen if the people involved come from diverse backgrounds and possess complementary skills to prevent conformity. The best collective decisions or creative ideas are often a product of different bodies of knowledge, multiple opinions, disagreement, and divergent thought processes, not consensus or compromise.
  • New technologies are making collaboration easier than ever, enabling us to increase our reach and broaden our network. Although new technology helps, it will not make your organization collaborative without the right culture and values in place. First, define what you want to achieve through collaboration then use these tools to promote creative collaboration.

How else are you championing collaboration within your organization to create value and succeed?

Thanks for sharing:

Preparing for Geopolitical Shocks

Geopolitical instability has steadily increased over the past years, and uncertainty in the global economy is at an all-time high. Thanks to globalization and advances in technologies, we now live and work in a tightly interconnected world, one in which the boundaries that previously separated domestic from global issues have disappeared.

Threats are no longer confined to traditional political borders, social structures, and geographic boundaries. Geopolitical shifts have dramatically altered the global economic landscape and brought politics and business together.

The rise of China as an economic and politically influential power has threatened the dominance of the United States as the world’s largest economy. Although the opening of China and a market of 1.4 billion people have benefited both countries, it has also intensified competition and sparked U.S. economic and technological espionage accusations against China, leading to strained relations between the two giants.

U.S. companies operating from China have felt the impact of this tense relationship. The opposite is true for Chinese companies in the U.S.

Across Europe, national populism is on the rise and now a serious force. In 2016, the United Kingdom shocked the world when it voted to leave the European Union, generating reverberating effects across markets.

Banks and financial services companies that once benefited from the EU passporting system have had their cross-border banking and investment services to customers and counterparties in the many EU Member States impacted, causing them to reimagine their value proposition models.

The recent invasion of Ukraine by Russia is another example of a geopolitical event that has had devastating effects on human livelihood and businesses. Although the conflict between the two countries has risen over the years, I think it’s fair to say that few political analysts, governments, and businesses predicted a war to happen.

The war has created a humanitarian crisis, rattled global commodity and energy markets, caused prices to soar, and forced many international companies to temporarily suspend their Russian activities or completely cut ties with the country.

Global supply chains which are already fragile and sensitive due to the COVID-19 pandemic are now facing new challenges in the aftermath of the Russia-Ukraine crisis. Multilateral economic sanctions have been imposed on Russia. A state of affairs that was unthinkable months ago and is now threatening to derail the nascent global economic recovery from the COVID-19 pandemic.

Given the global domino effect of geopolitical events and the shrinking of the distance between markets and politics, the need to better understand and more effectively mitigate geopolitical risk has become more urgent. The business impacts, whether direct or indirect, vary by company type and industry sector.

Your company may not be able to prevent wars between nations, but you can anticipate and better prepare for geopolitical shocks:

  • Integrate strategy, risk, and performance decision-making. Consideration of risks to business success is an important part of the strategy selection and execution process, not an afterthought.
  • Develop a better understanding of geopolitical trends and how they are changing. For example, what are the megatrends in business, politics, and technology that are making geopolitical risks more diverse, prevalent, and consequential?
  • Assess the links between these geopolitical events and business performance. What are the events that matter most to your business? For example, how might current global political trends pose physical, business, and reputational risks to your parent organization?
  • Anticipate how these trends are likely to play out in the short, medium, and long terms, and develop mitigation strategies for each geopolitical scenario. Proactively anticipate and plan for radically different worlds, instead of reacting to problems as they arise
  • Review your mitigation strategies as the world changes. Are they effective enough in case of a major shock?
  • Develop capabilities for continuous learning to anticipate, address, and recover from geopolitical crises.

What do you think?

Thanks for sharing: