Why Should CPA Firms Prioritize Cybersecurity as a Top Priority?
With the advancement of technology comes security threats for firms. Why should CPA firms prioritize cybersecurity as a top priority? Partner mitigation risk! For example, cybersecurity threats increased to over 80% from 2014-2020. And as we faced a global pandemic, industries are pushed to improve their cybersecurity systems. If they don’t, they can face a financial loss of about $1.5 trillion.
Accounting firms have access to a lot of clients’ sensitive information. If your clients’ data gets hacked because of inadequate security systems, there are severe penalties financially and down the road. As a result, prioritizing cybersecurity to secure your client’s confidential data is critical.
To understand more about cybersecurity, we have listed below the most common cybersecurity threats. In addition to this, we will discuss reasons why you should prioritize your firm’s cybersecurity systems. Lastly, we will also talk about how to structure your cyber risk management plan successfully.
Why CPA Firms Should Prioritize Cybersecurity?
In the news, you always hear reports of cybersecurity attacks among large companies. But the attacks do not always happen to large businesses. Most importantly, attackers favor small businesses, such as CPA firms.
Why? Because they are easier targets due to vulnerable cybersecurity.
Small businesses that have fallen victim to cyberattacks find it hard to recover due to the losses. Worse, some even go bankrupt after six months of being attacked. If that’s not enough to convince you, here are other reasons why you should invest in your cybersecurity systems.
1. Security Systems are Vulnerable to Attacks
Hackers are getting smarter by the second. With every new security system, cybercriminals seem to be one step ahead of organizations. So, no matter how much you think your accounting business is safe, a data breach is always a possibility.
Cyberattacks are currently targeting Industrial Control Systems (ICS). For this reason, business owners are joining an alliance with ICS vendors when it comes to updating their systems. Not only is ICS concerned with automating processes, but it also helps in security.
ICS vendors make it a point to develop new ways to counter cyber threats. But even with this, cyberattacks are still persistent.
2. There Will be Significant Financial Losses
One of the most cyberattacks is ransomware, which is designed to extort money. Although a data breach is costly, it may result in significant financial losses. More specifically, it can cost you 20% of your annual revenue. Subsequently, a data breach can lead to your firm’s bankruptcy, a partner call for capital, or other serious repercussions.
Furthermore, your income would be negatively damaged by hackers since your clients will lose faith in you. Finding new opportunities won’t be easy. Even if you managed to protect client data, clearing up the mess might put you in a lot of financial trouble.
3. Client Trust Will Decline
If you are unable to ensure information security, it may have severe repercussions for your clients. And when your clients realize that you cannot secure their data, you will lose engagements in the future.
Your business relies on clients to succeed. That’s why you must maintain a good relationship with them by using every means possible to protect their data. If your clients experience a data breach, they will more likely stop doing business with you. In other words, 84% of US customers will do precisely that.
Not all publicity is good. Within hours of a breach, an organization may become a worldwide news story. This negative publicity, along with the loss of consumer trust, can inflict irreparable damage to your firm. Not only will you lose customers, but you will also prevent new customers from availing of your services.
4. There Will be Legal Consequences
Turnover isn’t the worst thing that can happen to you if your clients experience a data breach.
Organizations are legally required to demonstrate that they have made all necessary efforts to secure personal data. If they fail to do so, customers will pursue legal actions for compensation, whether intentionally or not. Reports on a study stated that 94% of customers would consider taking the matter to court.
For example, last 2017, there was a data breach in Equifax, a credit reporting agency. More than 145 million people have been affected by this cybersecurity issue. As a result, the firm has paid more than $700 million as compensation to affected customers in the US.
5. Everyone Has the Potential to Hack
The myth is to execute these cyberattacks, that you need to be a professional hacker. But that is not true at all.
An amateur hacker, for example, can send a malicious email that infects your machine if you download the file. There is also information and guidelines on the internet for gaining access to sensitive data. Hacking as a Service is a simple, inexpensive hacking resource.
It’s important to remember that anybody can do cyberattacks, even those with basic or limited understanding. That’s what makes these cybersecurity crimes more dangerous.
Top 3 Cybersecurity Threats Among CPA Firms
The losses due to cyberattacks are enormous. And with technology, these attacks are inevitable. Setups for work from home are not also helping. While companies need to continue their operations, data security is increasingly at risk.
For this reason, accounting firms such as yourself should be aware of cybersecurity threats. We have listed below the three most common threats that you can face in the future.
Phishing is the most common type of cybersecurity attack, accounting for 80% of reports. Just last year, 73% of companies have fallen prey to this cybersecurity attack. And with the growing need for remote jobs, it will be harder to prevent this.
Phishing attacks are made by sending malicious emails that appear to be from reputable sources. Since that is the case, there is a big chance that the victim will click the link in the email. Clicking a link could result in the installation of malware or exposure of sensitive information such as login passwords.
Because of this, you should know how to protect your firm from phishing attacks.
The second most common type of cyberattack is malware. According to Kaspersky, there are about 360,000 new malware variants detected by their system in 2020 alone. Furthermore, Kaspersky reported that the number increased by 5.2% compared to 2019.
Malware covers a wide range of cyber threats, including viruses, worms, and trojans. It infects a computer when a user clicks on a malicious link or email. Once it is in your computer, malware can restrict access to vital network components. In addition, malware can cause severe damages to the system.
Cybercriminals use this to get into the system’s networks, steal private information, or wipe data from the system. In addition to this, malware can disable devices, requiring businesses to undergo expensive repairs.
Every year, hundreds of organizations are hit by ransomware. It has become increasingly prevalent in recent years since it’s one of the most profitable types of attacks. In 2020, there were over 145.2 million attacks of this type, as observed in the US alone.
As the name suggests, hackers will encrypt your data and ask for a ransom once you become a victim to it. Businesses can either pay the ransom or risk having their services crippled due to data loss. Either way, it’s a lose-lose situation, especially for small businesses.
How to Plan for a Cybersecurity Attack
Now that you understand why cybersecurity is a must, the next step is to learn how to protect your data. To keep cybercriminals away from your data, you need to start building a cybersecurity plan.
An Enterprise Risk Management (ERM) program will help protect your firm from an attack. It is an approach that identifies, assesses, and prepares you for possible losses that can disrupt your operations.
This program includes three major components: risk assessment, risk mitigation, and risk monitoring. By defining each of these stages, you can defend your company against security threats. Here is how you can plan your cyber risk management program:
Conducting regular assessments that aim to identify your company’s vulnerabilities is the best way to do this. When you discover any control gaps or inadequacies, you should address them immediately. Examine your checkpoints to ensure that your control rules and procedures are up to date and effective.
You should prioritize training, talent recruitment, and retention. The capacity of your workers to implement the correct internal control procedures can reduce security risks. That way, if a threat arises, you can respond promptly and report on it.
To successfully monitor your program, you should select a dedicated chief risk officer (CRO). And to ensure that your safety measures remain effective, gather up your internal audit teams. Instruct them to conduct client compliance checks and operational audits regularly.
Hackers are not getting dumber every minute. Why should CPA firms prioritize cybersecurity as a top priority? Fiduciary responsibilities to clients! As the internet evolves, so are bad actors’ hacking techniques and methods. As a result, accounting firms should make it a habit to update their security procedures regularly. In addition, they must keep up with the most recent cybersecurity news and developments.
In addition to this, it helps that you include the cybersecurity risk in your company in your ERM. Planning for cybersecurity risk enables your firm to be ready when the time comes that you face security-related attacks.