Cybersecurity: sectors and regions most at risk

The number of weekly cyber attacks on business is rising at 50% per year and the cost of each breach is mounting. Cybersecurity is now cited as the greatest concern for global businesses, coming ahead of other forms of business interruption and natural disaster.*

Yet cyber risk typically sits outside traditional fundamental company analysis. One explanation is the notorious difficulty of assessing the protections in place, including the ability to respond if a data breach occurs.

See the full report Understanding cybersecurity risks for more detailed analysis, including an example scorecard and case studies of companies having suffered recent breaches.

Assessing company exposure to cybersecurity risk at scale: the scorecard

Close engagement with CEOs and CISOs may be the best way to understand a company’s defences, but this is challenging to deploy at scale. To assess this, Schroders has developed a proprietary scorecard which uses 19 cybersecurity metrics giving an objective external snapshot of companies’ practices and preparedness.

It takes into account each company’s exposure to cyber threats based on geographic region and business activity and combines this with a measure of the company’s cybersecurity risk management processes. It also gauges whether the company’s threat level is improving, deteriorating, or stable.

The scorecard allows companies to be assessed against peers by sector, region and size.

It can act as an initial indicator of companies’ performance, highlighting areas where further targeted research might be needed.

Schroders’ cybersecurity scorecard: top-level results

At headline level, Developed Europe comes out top. While highly exposed to risk, companies in this region were likely to have the strongest cyber management practices in place. By contrast companies in the Developed Pacific region were likely to have poorer processes and a lower score for future risk. On a sector basis, utilities fair best while industrials are most exposed.

Why is cybersecurity a sustainability issue?

Cyber risk has the potential to be one of the most immediate and costly risks faced by organisations today. Businesses that fail to manage the risk may be less resilient and less sustainable.

Beyond financial risk, cybersecurity is also a social issue, as cyber breaches represent a threat to the individuals who personal data is often the key target.


*SOURCE: CheckPoint; Allianz Risk Barometer 2022

This article is issued by Schroders Wealth Management, which is part of the Schroder Group and a trading name of Schroder & Co. (Hong Kong) Limited, Level 33, Two Pacific Place, 88 Queensway, Hong Kong. Licensed and regulated by the Hong Kong Securities and Futures Commission. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

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