NEW YORK - Tuesday, 26. March 2024
New research shows cybersecurity is an organization-wide issue, and stronger board oversight practices lead to better cybersecurity performance
(BUSINESS WIRE)--Companies with advanced cybersecurity performance create 372% higher shareholder return compared to their peers with basic cybersecurity performance, according to a new report from Diligent and Bitsight. The report also reveals that highly regulated industries, such as healthcare and financial services, have the highest cybersecurity ratings, and companies with either a specialized risk committee or audit committee achieve better cybersecurity performance compared to those with neither, with ratings of 710 and 650 respectively.
“These findings show that cybersecurity is not just an IT problem — it is an enterprise risk that has material impact on a company’s near-term performance and long-term health, and one that management and the board needs to be up to speed on,” said Dottie Schindlinger, Executive Director of the Diligent Institute. “With increased pressure from regulators for organizations to demonstrate how they oversee cybersecurity, now is the time for boards and leaders to build their competency around cyber risk.”
“Cybersecurity is no longer about simply mitigating risk, it's now a key indicator of financial performance. Companies must treat cybersecurity as a cornerstone of their business strategy, guided by clear, ambitious benchmarks, and backed by the full support of their boards," added Dr. Homaira Akbari, CEO of AKnowledge Partners, Board of Director member for Banco Santander and Landstar System and member of Bitsight’s Advisory Board.
In the “Cybersecurity, Audit and the Board” report, Diligent and Bitsight analyzed more than 4,000 mid to large-cap companies in public indices globally. Additional findings include:
Companies with measurably stronger cybersecurity performance deliver higher financial performance than their peers
The average total shareholder return (TSR) for companies with advanced security performance ratings over a five-year and three-year period was 71% and 67%, respectively, while companies in the basic performance range delivered 37% and 14% TSR over the same time frames.
Companies with a higher number of independent directors are more likely to have advanced security ratings. About 76% of directors on the boards of these companies with advanced security ratings are independent, compared to 66% in the basic security performance category.
Companies with specialized risk or audit committees have better cybersecurity performance
The median cybersecurity rating for companies with specialized risk committees is 730, compared to 720 for companies with just audit committees, indicating there is not a significant difference in the ability of the audit committee to oversee cyber risk compared to a specialized risk committee.
Having a cybersecurity expert on the general board is not enough – those experts need to be directly involved with cyber oversight. Companies with cybersecurity experts on either audit or specialized risk committees achieve an average security performance rating of 700, whereas companies with cybersecurity experts on the general board, but not on either committee attain a security rating of 580.
Highly regulated industries outperform other industries in cybersecurity performance
The healthcare sector had the highest average security ratings overall at 730. Of the companies with advanced security performance ratings, 33% came from the financial services sector, with an average rating of 720.
By comparison, 24% of companies with basic security performance ratings came from the industrials sector, and the sector with the lowest overall performance rating was the communications sector, at 630.
"The research shows that market leading companies that prioritize cyber risk management outperform their peers,” said Derek Vadala, Chief Risk Officer, Bitsight. “This cannot be achieved without a strong understanding of cybersecurity performance and clear benchmarks shared across the executive team and board. The role of the CISO has shifted. Cyber risk is a key component of business performance."
Learn more about how to get certified to oversee cyber risk here. For more information on how Diligent and Bitsight partner to give directors access to market-leading cyber risk data and insights, visit here.
View the full report here.
Methodology
Analyses consists of 4,149 mid to large-cap companies in public indices across Australia, Canada, France, Germany, Japan, the United Kingdom, and the United States. Diligent correlated each company’s cyber oversight structure with their corresponding security performance data, obtained from Bitsight. The correlation method involved averaging the ratings within each category to identify discernible patterns. Bitsight creates cybersecurity ratings based on externally observable measurements of an organization’s security posture. View a full report methodology here.
About Diligent
Diligent is the leading GRC SaaS company, empowering more than 1 million users and 700,000 board members and leaders to make better decisions, faster. The Diligent One Platform helps organizations connect their entire GRC practice — including governance, risk, compliance, audit and ESG — to bring clarity to complex risk, stay ahead of regulatory changes and deliver impactful insights, in one consolidated view. Learn more at diligent.com.
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About Bitsight
Bitsight is a global cyber risk management leader transforming how organizations manage exposure, performance, and risk for themselves and their third parties. Companies rely on Bitsight to prioritize their cybersecurity investments, build greater trust within their ecosystem, and reduce their chances of financial loss. Built on over a decade of market-leading innovation, Bitsight’s integrated solutions deliver value across enterprise security performance, digital supply chains, cyber insurance and data analysis. For more information, visit bitsight.com or connect with us on LinkedIn.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240326307541/en/
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Contacts
Julia Hanbury
Senior Communications Manager, Diligent
Jhanbury@diligent.com
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