by Joseph George
What could potentially cause more damage to your business? A hurricane or a cyber attack?
If you said the latter, you’re in good company.
Even after the costliest hurricane season of all time in the U.S., 74 per cent of business leaders we surveyed said they consider a data breach, hack or cyber attack a greater business risk than a natural disaster.
Now the Global Risks Report 2018 from the World Economic Forum (WEF) shows those concerns are far from unfounded. In the new report, among the “Global Risks of Highest Concern for Doing Business,” cyber attacks rank at number 8, while extreme weather events and natural catastrophes come in at 18 and 19, respectively.
While the report found extreme weather events and natural disasters to be both more likely and more impactful than cyber attacks, that all three rank among the most likely and most destructive events should be a warning for any business still failing to take action.
If you’re not prepared, an inevitable disaster could take your organisation offline for hours or days, which can sometimes damage a business or brand beyond recovery.
When business risk becomes real danger
Both natural disasters and cyber security threats can hobble businesses.
When Hurricane Irma swept across Florida, hundreds of businesses, from amusement parks to cruises, had to shut down operations and cancel plans. The estimated cost of property damage and lost economic output was estimated at $83 billion. Tropical Storm Harvey, which crippled Houston for weeks, was even costlier, with some estimates of the impact as high as $190 billion.
When Disney World announced it would be closing for two days during Hurricane Irma, some estimates put its losses at $90 million, not counting any damage from the storm. Six of the largest airlines lost $550 million due to closings and cancellations.
Cyber attacks are often as disruptive and expensive as natural disasters. Some estimates predicted the cost of ransomware attacks alone in 2017 would exceed $5 billion.
The NotPetya ransomware attack shut down a number of businesses, and Merck was one of the hardest hit. It left production suspended and employees unable to work, costing the company $300 million in the third quarter of 2017. It was on track to lose another $300 million in Q4.
Several years ago, the company Code Spaces, which had been in business for seven years, folded in just 10 days after a devastating ransom attack.
Unfortunately, the WEF predicts cyber attacks and extreme weather events will only get worse.
What the WEF report says is on the horizon
The report notes that cyber attacks against businesses have almost doubled in five years, while citing attacks like WannaCry and NotPetya as examples of both the scale of attacks and the hundreds of millions of dollars falling prey to a ransomware attack can cost businesses.
With the internet of things expected to hit 20.4 billion devices in 2020, up from 8.7 billion last year, hackers have more targets, the WEF report notes, and attacks are only expected to become more common, more damaging, and more expensive and quickly becoming the face of the 21st century disaster.
At the same time, the 2017 hurricane season contributed to extreme weather events that the WEF says continue a trend toward increasingly expensive recoveries. From wind and wildfires to floods and mudslides, these patterns will only grow more frequent in coming years, the WEF suggests.
Are you prepared?
In our survey of business leaders, we asked them to rank their confidence that they could overcome any disaster, with 1 being most confident. Only 10 per cent said they were a 1, 2, or 3. A third of respondents placed themselves at the bottom of the scale, at 8, 9, and 10, the least confident.
The responses do show progress, however. Some 31 per cent of respondents are now reconsidering their existing disaster recovery plans after the 2017 hurricane season, and 26 per cent will likely implement a new plan.
Still, 40 per cent said they had no plans to change how they plan for disaster recovery.