Beyond Financials: Why Cybersecurity Should Be a Top Investor Priority

Cybersecurity Should Be a Top Investor Priority
Image by Biljana Jovanovic from Pixabay

In the world of digital businesses, it’s interesting how the very aspects that facilitate operations can lead to the demise of a company. We’ve seen large corporations such as Yahoo have as many as three million accounts hacked, and this is far from being a unique case. 

These situations in which corporations leaked or misused millions of accounts and credentials lead to an increase in regulations and policies on both local and global levels. Besides that, the users have also become more privacy-aware on the net. 

Even if a company isn’t handling billions of pieces of information, cybersecurity should be at the top of the list of priorities. Investors need to consider the security levels of startups they invest in, as potential data leaks can lead to a bad reputation for both sides. 

Understanding the importance of cybersecurity and the value it presents for both customers and investors should be a necessary task for startup founders. 

Significance of Cybersecurity in Investments 

Every year there are millions of startups emerging across the globe. Not all of them are going to succeed. Some because of a useless product, others because of poorly conducted marketing, and some because they haven’t implemented effective cybersec policies, which led to compromising data.

If your startup has an amazing product and it’s becoming more popular, why should privacy be the hill to die on? In the past, investors have been focusing more on the indicators of the financial health of a business rather than its technical aspects. 

But in the current landscape, the competition is becoming more fierce, and every aspect of a company is being considered. Cybersecurity breaches are actually one of a few events that can happen to a business that can make it sink to the bottom of the startup ocean. 

For an investor, if a project has the potential to lose most of its value due to ignorance or recklessness regarding safety, they will likely ignore it completely. 

However, competition isn’t the only reason for prioritizing cybersecurity. Hackers are becoming more sophisticated, and the increasing reliance on digital infrastructure led to an increase in their activity. 

Cybersecurity as a Value Indicator

Cybersecurity as a Value Indicator
Image by Peggy und Marco Lachmann-Anke from Pixabay

By being able to prevent any downtime caused by cyber threats, cybersecurity represents significant value. The ability to safeguard its digital assets and sensitive information shows that the company is responsible and caring for its customers.

This posture is intertwined with the company’s operational performance and financial health. Cybersecurity measures are a whole set of different policies that require technical skills, upskilling employees, and investing in software and technology. Successfully executing the mentioned policies is a show of competency as a company.

Just like a security breach is a signal that the company wasn’t careful nor had the desire to enact safety protocols, leading to a blow in reputation, cybersecurity measures show that the company won’t suffer from that.

In the eyes of investors, once they understand that the company won’t make a security fiasco, they can focus more on the product and other unique aspects.

While businesses in all fields need to adhere to regulations about data, some industries require more attention than others. Many people have jumped on the artificial intelligence hype train, yet this type of software requires much more data, which ultimately means greater care with it.

On the upside, having a streamlined and ethical process of collecting and analyzing data and making assumptions based on the results is another show of competency and value.

Ways to Improve Your Company’s Cybersecurity

There are many different ways of improving your company’s overall security. Starting from training each employee to prevent and handle online threats to more technical aspects. However, no matter how effective you are at implementing these protocols, they don’t guarantee complete safety. 

1. Employee Training

As someone who spent a lifetime online, I’ve had the opportunity to ruin quite a few PCs because I wasn’t very careful. Thankfully, I’ve learned a lot of lessons in those situations. Employees, even in the tech industry, aren’t necessarily tech-savvy. 

To mitigate the risks of having your employees leaking data or having their computers corrupted, organize company-wide training that will help them work through any blind spots in the context of online security. 

2. Regular Software Updates

It’s your day off; you’ve woken up without a worry in the world, and you’ve decided to jump on your PC. But instead of going straight to social media or a video game, you’re welcomed by a Windows update that will last for an hour.

Well, will it help if I tell you that happens for your own good? Regular software updates replace old versions of programs that might have some holes in their security. 

3. Data Backup 

Backing up data is essential if you want to protect your company from a complete catastrophe. Regular data backups ensure that no data is lost in a situations such as power outages, ransomware attacks, or employee mistakes. 

There is software that does data backup automatically, but it’s advisable if you would hire a professional who will take care of cybersecurity as well as doing data backups and software updates. It’s always helpful to have someone reliable who will ensure that backups are regular and safe. 

Non-Monetary Impacts of Cyber Incidents

Non-Monetary Impacts of Cyber Incidents
Image by Simon Hill from Pixabay

If you’re in California, you should know what is cpra, but if you’re doing business with customers or clients from Europe, you should also keep up with GDPR. According to these documents, you will pay significant fines, but the impact of breaching user privacy isn’t only financial.

Yahoo has been mentioned in the introduction, and if you’re deciding what email provider you want to pick, you’re probably not going to choose it. The reputation of an unsafe and unreliable provider is often what will turn away every customer, even if their features are the best in the world. 

This is an extreme case of a company that permanently ruined the bond between itself and its customers. Investors wouldn’t want to invest in a company that can’t get customers to trust them enough to give them their money. 

Poor cybersecurity practices affect not only the external processes of your company but also internal ones. For example, if some of your employees catch ransomware on their workstations, they will likely have access to work-related data restricted. Furthermore, if this happens on a company-wide level, you can expect serious downtime and data loss. 

This is only the tip of the iceberg, if your company manufactures physical products, a whole chain of processes will get stopped. Your customer service, supply chain, as well as critical functions of the manufactory will stop.

Hackers are often talked about as if they are random tech-savvy people who are evil and want to ruin someone’s achievements. The truth is that they can sometimes get hired by your competitors who want to steal intellectual property such as trade secrets, research data, and product designs. 

Mitigating Investment Risks

Following at least some of the ways mentioned in the related section will certainly lower the chances of failed investments. However, on the financial side, there are additional ways to protect yourself legally. 

For example, if your company is handling equity stocks, another group affected by cybersecurity breaches are your employees. You can use equity management software for large enterprises to understand how the shares of your employees are delegated. 

Cyber insurance has emerged as a tool to facilitate recovery from cyber threats. Just like health insurance can’t protect you from getting sick, cyber insurance won’t prevent hackers from trying to get you. But, it will serve as a safety net for covering legal fees, regulatory fines, and recovery efforts. 

Taking Care of Online Safety Expands Investment Opportunities 

From preventing financial losses to keeping a reputable image in the eyes of your investors and customers, high cybersecurity standards are essential for your business. Even though malicious attacks can be conducted more efficiently than ever, so is defending against them easier. 

There are no excuses for not implementing some safety policies at your workplace. Some of them can even be applied for free, and those that have high costs justify their price by the amount of safety they bring. 

Being careful with data and protecting everyone involved with your product will go a long way. Although amazing security protocols won’t make up for a poor product in the eyes of the investors, not having them can certainly turn them away from your business. 

⸻ Author Bio ⸻

Veljko Petrović

Veljko is a student of information technology that paired his passion for technology with his writing skills. He enjoys researching topics such as robotics and programming and cultivates his knowledge in philosophy, classical literature, and fitness. Veljko’s favorite writers are Borislav Pekić, Miloš Crnjanski, and Ernest Hemingway. 


The content published on this website is for informational purposes only and does not constitute legal, health or other professional advice.

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