How to protect IR platform from data breaches? The modern Investor Relations Officer (IRO) is online. Every day, you use digital technologies to track investor behavior and jumpstart essential outreach.
While the industry’s rapid digital acceleration has primarily streamlined your work, it has created new challenges. With each new program that connects to the Internet, your IR tools become vulnerable to a data breach just like any other system.
The threat of cybercrime isn’t one your IPO or public company can ignore. A single breach can expose your customer and proprietary data, leveling devastating damage to your capitalization. You need to protect your full suite of IR tools, including CRM software, engagement analytics, capital markets events, and IR website.
Data Breaches Are on the Rise
According to historic data collected by Deloitte, the number of data breaches rose by a staggering 4,379 percent between 2015 and 2020. The company points to the rise of remote work as the reason for this incredible surge in breaches, as many companies adopted cloud-based software that made it harder to prevent and contain compromises.
More recently, the Identify Theft Resource Center (ITRC)’s 2022 Data Breach Report reveals 1,802 data breaches occurred in 2022. While this extraordinary number of compromises was 60 events short of the previous record set in 2021, the number of victims impacted was 422.1 million — an increase of nearly 42%.
Research shows that any company with security vulnerabilities may be at risk of an attack. However, the Boston Consulting Group’s Global Wealth Report shows financial firms are the most vulnerable. The financial sector is 300 times more likely to be targeted by cybercriminals than any other industry.
Why? Threat actors see these companies as a goldmine of information, as their services include critical financial and proprietary data.
One Data Breach Can Have a Devastating Effect on Your Company
When estimating the impact of a data breach, you need to break down its cost in two ways:
- The initial payout to those affected by the breach
- The eventual loss in stock price.
1. How Much Will You Have to Pay?
While the exact cost of a data breach may vary depending on its scope, most incidents levy an enormous penalty.
IBM’s latest Cost of a Data Breach Report shows the average total cost is $4.35 million. However, those in financial services, industrial, technology, and energy industries can expect an even greater price tag. These critical infrastructure organizations averaged a whopping $4.82 million.
Although these figures are no doubt impressive, many high-priority breaches cost even more. Once you account for fines, penalties, and settlements, the monetary cost of a breach may far exceed these averages.
The Chinese ride-hailing company Didi Global, for example, was fined the equivalent of 1.19 billion USD for violating Chinese security laws and personal information protection laws. In the US, Equifax could pay a settlement as high as $700 million.
2. What Does a Breach Do to Your Capitalization?
Payouts don’t make your breach go away. In fact, research shows that these security issues have a lasting impact on your capitalization. A single data breach can take a sledgehammer to your stock price as consumer confidence declines.
Within the first 110 days of a breach, the average company’s share prices fell -3.5%. After a year, companies underperformed by 8.6% and after three, their stock share price was down by -15.6%.
How to protect IR platform from data breaches?
What Does Your IR Software Need to Protect Customer and Proprietary Data?
With such a long-lasting impact on your bottom line, it’s important your team does its due diligence when choosing IR partners. You need to know the IR firm supplying your software is committed to delivering security, compliance, and privacy with every IR tool.
When reviewing your IR partner’s security policy, expect no less than these standards.
Security Compliance Audits
The best IR firms rely on third-party credentialed assessors to ensure their technical infrastructure and data-handling processes meet or exceed global standards. SOC-2 Type II certification, in particular, is an important third-party accreditation that proves your IR partner follows global best practices for managing data.
An IR firm should engage in penetration tests (completed in house and by independent entities) to evaluate the strength of its security controls. These tests can help your software provider spot and patch vulnerabilities in its code.
Encryption is another essential feature of your IR software. Strong encryption protocols should include secure cipher suites that encrypt all data in transit (transmitted between you and your IR firm), such as the following:
- TLS 1.2 protocols
- AES256 encryption
- SHA256 signatures
Encryption should also protect all data at rest using National Institute of Standards and Technology (NIST) compliant encryption standards.
Network Security and Server Hardening
Your prospective IR firm should make reasonable efforts to minimize its vulnerabilities by turning off non-essential services. Server hardening can disable (or delete) unnecessary applications, ports, accounts, and other at-risk features that cyber attackers may use to gain access to confidential information.
Making sure the right people can access the right tools at the right time is tantamount to delivering another important element of software security. This extends to both your IR team and your IR provider.
Access control ensures your IR firm restricts who can access sensitive data, ensuring its employees are only authorized access to information they reasonably must handle and no more. It also includes multi-factor authentication and best-practice password policies to avoid risks at the workstation level.
Those who do access information will have their access and activity logged and retained. If you don’t already follow these protocols within your own office, it’s a good idea to adopt them soon.
Data Retention and Disposal
When reviewing your options of IR software, don’t overlook a firm’s data retention and disposal policy. All production systems and backups should be encrypted and destroyed following NIST data disposal standards.
Choose Your IR Software Wisely
Today, working offline isn’t an option. The latest IR tools are cloud-based SaaS technology that connects your data to the Internet. While this may open your tech to new vulnerabilities, you can protect your IR intelligence by choosing the right IR partner.
Take the time to review a firm’s security policy, ensure it provides encryption and performs appropriate audits and penetration tests. These features can protect your enterprise from the monetary cost and reputational damage that comes with a data breach.
Hope now you know how to protect IR platform from data breaches.
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