The main drivers behind reputational risks are cybersecurity and social media but it seems that directors are not taking much action to prepare and manage these risks, according to a recent report by consulting firm EisnerAmper.
About 70 percent of survey respondents see cybersecurity as a “devastating risk”, while more than 95 percent of companies turn to internal audit or external auditors/consultants to monitor cyber threats, said the survey titled, “Concerns About Risks Confronting Boards”.
“In recent years we’ve seen countless news stories about major corporations being victimized by cyberattacks, oftentimes involving the confidential information of hundreds of thousands—if not millions—of unsuspecting people, said Jason Ewasko, Compliance Director, Cipperman Compliance Services, a financial consultant. “In this day and age, with virtually any event going viral across a multitude of media, reputational damage can happen in an instant, but can last indefinitely and this is yet another reason for firms to take every possible step to protect themselves from cyberattacks.”
Boards, however need to provide more support to help their companies effectively manage these risks. The report said that 24 percent of companies feel their boards are well-versed in understanding cybersecurity risk. Meanwhile, a staggering six percent of boards believe that they are “well-versed” in social media risk.
— Fay Feeney (@fayfeeney) January 23, 2016
“Although tech-level threats have been part of our reality for several years now, the industry still is not fully up to speed in terms of how to deal with them,” added Ewasko. “With that in mind, it’s not surprising that both management and board personnel may have trouble grasping the significance of taking precautions to protect against cybersecurity vulnerabilities.”
Cybersecurity remains a hotly debated issue, and it is a topic Ethisphere encourages global companies to focus on. Hear more from leading board members at the 2016 Global Ethics Summit, taking place March 9th and 10th in New York City, where leaders will discuss how boards can better engage in the ethics and culture of an organization.