How does robust cybersecurity add value to a business?

August 31, 2022  |  Devin Partida

This blog was written by an independent guest blogger.

A company’s IT infrastructure and data are some of its most valuable assets today. Consequently, protecting them is an increasingly critical goal to stave off worst-case scenarios and preserve a business’s value. By the same token, robust cybersecurity can make a company more valuable.

Many organizations understand the importance of cybersecurity as a defense but may overlook its role as an asset. IT security will become a more important differentiator as cybercrime rises and digital systems play a more central role in business. Here’s a closer look at how stronger cybersecurity adds value to a company.

Reduced expenses

Maintaining robust cybersecurity requires additional spending, but it actually lowers expenses in the long run. The average data breach cost $4.35 million as of 2022, a figure that keeps rising over time. Stronger cybersecurity prevents these costly events, improving a company’s bottom line.

Cyberattacks are too common to assume you’ll never encounter one, either. These attacks happen every 39 seconds, and more than half of all businesses have experienced some kind of security incident. A company will suffer an attack without reliable cybersecurity, and it will be costly. Consequently, stopping them is a critical part of lowering long-term expenses.

Added resilience

A more robust cybersecurity strategy will also make a business more resilient. Part of that stems from preventing attacks. Fewer successful hacks mean less disruption, leading to increased uptime and productivity. However, even if a breach does occur, companies will be more likely to survive it with strong cybersecurity.

On average, companies employing security AI lose $3.05 million less in data breaches than those without it. Similarly, zero-trust architecture saves $1 million in a hack. These reduced costs ensure businesses recover faster, in some cases avoiding bankruptcy, making them more valuable.

Lower risks

The reduced chances of a breach and lowered costs translate into fewer risks for investors or potential partners. Many business valuation methods adjust rates based on risk or liability. As a result, the fewer financial threats a company poses to potential buyers or investors, the more valuable it is.

Cyber-risks are some of the most important of these factors today, so more valuation methods will look at them to determine business value. That applies to formal valuations from investors, tax officials and other companies looking for potential partners. Given the rising likelihood of third-party breaches, more businesses today will judge whether a partner is worth it by their cyber-risks.

Increased customer confidence

Robust cybersecurity will also improve a business’s reputation among customers. Between 80%-90% of consumers say they wished there were more companies they could trust with their data, and 84% will switch over data concerns. If businesses don’t have strong security, it could drive customers away, dropping their market value, but better security could have the opposite effect.

These trends apply to B2B markets, too. Businesses seeking to improve their own security to attract and retain customers will require stronger cybersecurity from their partners and vendors. Consequently, B2Bs that can promise increased security will be more valuable to potential clients.

Cybersecurity is a crucial business value metric today

Customers, investors, buyers and partners are looking for cybersecurity across all markets and industries. As a result, companies offering strong data security will have more value for these parties. They can then enjoy more business, potentially higher sales and favorable market valuations.

Businesses today can’t afford to overlook cybersecurity. It’s becoming a competitive business advantage, not just a safety net, as these issues become more important to a wider range of people and organizations. Companies must capitalize on that opportunity to keep their information safe and prove their reliability.

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