Cybersecurity

Cybersecurity A Growing Investment Consideration

Alongside the more traditional measures such as earnings per share, P/E ratio, dividends, and yield, cybersecurity has recently appeared on many investors’ radar as one of the newest criteria for company valuation. For some institutional fund managers and private investors, understanding a company’s security posture and risk management strategy is an essential element of thorough investment due diligence.

The Impact of a Breach on Company Performance and Valuation

Cybersecurity breaches have commanded headlines for years, but in recent months the breaches and their devastating impacts have become transparent to even the most casual of investors. Some high-visibility breaches of past years, such as Target, ultimately yielded little long-term impact on stock valuation (and arguably even brand), as a result of the negative consequences such as Personally Identifiable Information exposure and financial losses in breach mitigation, legal fees, and increased cybersecurity spend. However, 2017 saw cyber incidents that not only affected millions of Americans, but also caused signification disruption to business operations and a change to the organization’s fundamental business model.