Ideas for Leaders #717

Global CFOs: Facing Growing Data Security Threats

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Key Concept

Companies are increasing their efforts to combat data security breaches, a growing problem around the world according to a recent global survey of CFOs. 

Idea Summary

In April 2018, five million records of Saks Fifth Avenue and Lord & Taylor department stores (both owned by Hudson Bay) were compromised. Facebook has been hit twice in 2018, acknowledging that at least 87 million customer records had been hacked in March and another 120 million in June. The pattern of such headline-grabbing security breaches (Macy’s, Delta Airlines and Best Buy are just some of the other U.S. brand names affected) repeats itself in every other region of the world. 

Not surprisingly, CFOs are growing increasingly concerned about data security breaches, according to a recent global survey by Duke University’s Fuqua School of Management. In the U.S., Europe and Latin America, an all-time high of nearly one in five CFOs said that their companies had been hacked. In Africa, the problem is even more acute with one in four companies having fallen victim to data breaches, according to the CFOs surveyed. In contrast, only 13% of Asian company CFOs said hackers had successfully penetrated their systems; however, a large number of CFOs in Asia (30% compared to just 8% in the U.S. and 11% in Europe) acknowledged that they did not know whether or not the data of their companies had been compromised.

Business Application

In response to the increasing threat from hackers, companies are taking deliberate steps to strengthen their data security. For example, 7 out of 10 companies in the U.S. and Europe have installed software and changed procedures in a deliberate attempt to reduce the threat of a data breach. 

Another common response by global companies (including 70.9% of companies in the U.S., 62.9% in Europe and 61.3% in Africa) is to take steps that make it harder for a hacker to penetrate systems — steps such as two factor authentication, shorter password expirations and more elaborate passwords.

While Asian companies (48%) and Latin American companies (38%) have been less focused on installing software or changing their procedures, they have been more proactive in terms of taking steps to make it harder to penetrate their systems (56% of Asian companies and 55% of Latin American companies have taken such steps).

Other steps taken by global companies include:

  • Requiring employee training on best practices to prevent hacking and data breaches
  • Hiring a cybersecurity firm or a consultant to review their protocols and the safety of their systems
  • Moving to cloud servers
  • Purchasing new hardware to try to prevent a data breach
  • Hiring at least one staff member specializing in cybersecurity
  • Sending out a fake email to employees trying to get them to click a phishing link

Not all companies are being proactive about stopping computer hackers. In the U.S., more than 11.4% of companies did not take any steps to increase the security of their data, although 5.4% of the CFOs believe they should have. The other 6% of respondents had confidence in their systems and did not believe further security improvements were needed. The same confidence was reflected by the CFOs of the 8% of European companies that had taken no security steps: the vast majority believed that their security measures would be able to repel hackers.

Whether or not the confidence of these CFOs is justified, the message is clear: the security of your data is at risk by increasingly bold and sophisticated computer hackers. You owe it to your customers and other stakeholders to place as many security barriers as possible in the path of these criminals.

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Authors

Institutions

Source

Idea conceived

  • June 2018

Idea posted

  • October 2018

DOI number

10.13007/717

Subject

Real Time Analytics