The cyber threat landscape is ever-changing, with companies of all sizes and industries ranging from targeted to random attacks. Thus, the evaluation of these risks in business transactions is a necessary procedure. So, what is cyber due diligence? Here is more about it.
The concept of cyber due diligence
Increasingly, large clients when deciding to cooperate require their partners to have a cyber risk insurance policy, realizing that their data is constantly under threat and needs to be protected. And it is no coincidence that companies today are more exposed to threats to network security and privacy than ever.
In today’s economy, information is your organization’s most valuable asset. However, due to the development of mobile technologies, cloud computing, and the rapidly growing volumes of digital information, the secure storage of such data is becoming one of the most difficult problems.
Cyber risk is no longer a technological issue. Today, cyber risk is a constantly changing and systematic phenomenon in organizations and communities that requires active control. With a surge in remote work, supply chain interconnectedness, digitalization, and vulnerabilities in critical infrastructure, organizations are becoming more vulnerable than ever. To be successful, organizations must not only maintain protection but also develop their resilience.
Many organizations view cybersecurity as an operational or technology issue and spend more and more every year looking for solutions to ensure it. However, the scale, frequency, and economic impact of cybercrime, whether it be ransomware, attacks on supply chains, or business disruption, continues to grow.
A detailed understanding of risk is fundamental to any organization, and a thorough risk assessment is critical. With the constant threat of cyberattacks, board members simply need to be interested in this area. At first glance, assessing cyber threats and preparing appropriate documentation is a simple matter. However, it often results in prohibitive costs, especially when it comes to penetration tests and other technically complex activities. Cyber risks are generally classified as highly complex IT risks that require costly specialized resources to manage. Cybersecurity, like IT, is largely defined by business and operational processes, so cyber due diligence can be an ideal starting point for effective cyber risk management. Such an assessment will identify risks for all departments and rank them by priority, and its results will serve as the basis not only for further work but also for the creation of a reporting system.
Cyber risks evaluation as a part of due diligence
Small and medium-sized businesses are becoming increasingly dependent on information systems, making them vulnerable to cyber risks: data leakage due to cyber-attacks and computer viruses, data loss due to human factors, or media failures.
Cyber risk management is becoming a strategic imperative that has profound implications and implications for the overall productivity of small and medium-sized businesses. Cyber risk management focuses on assessing the threats, potential impacts, and vulnerabilities of small and medium-sized enterprises.
Among the most common cyber risks there are:
- hacker attacks on information systems,
- theft of personal data,
- unauthorized transactions,
- crypto viruses,
- DDoS attacks on DNS servers.
It should be noted that cyber risks pose a significant threat to the activities of financial institutions and other entities. These are the loss of competitive position in the market, damage to reputation and brand, the outflow of potential customers, loss of trust in the partner, and more. The complexity of cyber risks will only increase in the future. Therefore, managing cyber risk, avoiding or mitigating its impact through insurance is becoming strategically important.