Cybersecurity Investment + Board Involvement = Better Shareholder Returns
What if you could better your competitor’s returns by 372%?
Would that make the pain of improving your cybersecurity practices worthwhile?
A study by Bitsight and Diligent says that is possible.
The study analyzed data from 4,000 companies worldwide and found two interesting statistics.
- Over a three year period, companies with advanced security performance ratings had an average total shareholder return of 67 percent compared to 14 percent for those with only a basic performance. Bitsight measures and rates companies’ security ratings as their core business.
- Over a five year period, those in the advanced performance range showed an average total shareholder return of 71 percent compared to 37 percent for those in the basic performance range.
Insurance companies are looking to find actuarial data that helps them risk rate companies and set premiums. While you cannot draw a cause and effect correlation here, insurance companies of all types are likely to latch on to data like this to help them rate risk.
The report emphasizes the direct involvement of cybersecurity experts within a board’s risk or audit committee is a critical factor. Companies with cybersecurity experts on either committee had an average security performance rating of 700 (out of 900), while companies that only had experts on their general board had an average rating of 580.
The report also highlights that highly regulated industries typically outperform others. The healthcare sector led with an average security rating of 730, while the financial services had an average rating of 720. Conversely, 24% of companies with basic security performance came from the industrial sector. The communications sector, according to the report, has the lowest overall performance rating at 630.
Bottom line is that better cybersecurity pays. If you need cybersecurity expertise on your board or board committee, please contact us or check out our website at https://www.cyberboardtalent.com . Credit CSO Online
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