Digital data has grown exponentially in recent years, spurred by increased penetration of mobile devices and consumption of online services. The rapid expansion in the volume of data companies store, many of which are relatively new to data management and security, has attracted cyber criminals employing increasingly sophisticated tools and techniques. Cyber crime costs global companies around 60% more than it did only five years ago, whilst in the US, that number has risen by over 80%.
Cyber is an increasingly critical source of business risk, especially for companies with important intangible assets such as brands, customer relationships or technology. The negative impact a data breach can have on a brand link straight to companies’ competitiveness, future revenues and future cash flows. Data breaches often uncover poor governance practices and weak management; changing people or policies is quick but re-establishing market and customer trust take much longer.
Our International Small Cap Equity team were concerned about potential cyber security risks at an Asian software company held in the portfolio. The team engaged with the company to better understand how it is prepared to deal with cyber threats.