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Cyber risk remains a key focus for directors
Directors perceive cyber-attacks to be the biggest threat to New Zealand businesses in 2017, with 79% of those surveyed rating the impact on their organisations strategic growth, operational efficiency and legal/ contractual compliance as medium or high.
65% of respondents believe the risk environment will increase during 2017, in the public sector that perception is shared by 83% of directors.
The third Directors’ Risk Survey by Marsh of Institute of Directors’ (IoD) members, designed to gauge director views on a wide range of risk issues, says cyber-attacks, technological disruption, reputational risk, and the time spent on risk oversight remain a key focus for directors.
Technology-related risks top this year’s lists for both external (cyber-attack) and internal (major IT incident) risks considered to have the greatest potential impact to businesses. 75% of directors surveyed considered an IT disruption to be a high or medium internal risk.
Marsh Head of Country Marcus Pearson said cyber-attacks did not rank in the top five risks in the 2013 survey showing the speed at which this dynamic emerging risk is changing, at least in the minds of directors.
“It comes as no surprise there is frustration at the perceived slow progress of affordable, practical insurance protection for cyber related risks as insurance companies struggle to adapt to the pace of change,” Mr Pearson says. “There are deep concerns about the potential for losses that hyper-connectivity brings as cyber threats move from defending against website defacements, denial of service attacks and data breaches to more serious attacks on cyber-physical systems controlling physical assets and critical infrastructure.
32% of directors say they do not have the framework in place to manage the risk of a cyber-attack, no change from IoD’s own Director Sentiment Survey conducted late last year which showed barely a third of directors had the capability to deal with their organisation’s digital future.
IoD Manager Governance Leadership Centre Felicity Caird says the management of risk is critical to a board providing strategic leadership and creating value.
“Risks change and evolve and the need to stay current is emphasised by this report. Technology is an integral part of business capability and boards need to take responsibility to be able to lead in this new era.” Ms Caird says. “Digital leadership is critical in a disruptive world. Technology continues to be a strong theme when it comes to internal risks so developing board and organisational capability must be areas of focus for directors to ensure organisations are resilient.”
62% of respondents envisage the increasing influence of social media will have an impact on their business over the next year, ahead of talent attraction and retention (59%), and increased corporate governance requirements (55%).
Mr Pearson says one positive finding from this year’s survey was that the majority of boards spent more time on risk management than in 2016.
“84% of respondents indicated their boards spent either a significant or moderate amount of time on risk management. The motivation for this though, is likely to be a direct result of a sea of change in the health and safety responsibilities of company directors."
Read the Directors' Risk Survey Report 2016
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