Investors fret about IT security

More honoured in the breach

The lack of a fully-documented information security policy in halfo of the FTSE 350 companies interviewed by LogicaCMG is worrying for investors, who regard security breaches as one of the main factors that would impact their assessment of a company.

Just over half of the FTSE 350 (53 per cent) believe the IT department should be solely responsible for enforcing information security management; 71 per cent think their IT department should be accountable for implementing and delivering a security policy.

But investors think differently, with 87 per cent of those interviewed by LogicaCMG expecting a company board to actively review its security vulnerabilities.

This difference of opinion goes deeper, with around half of companies believing that there would be no impact on share price following a security breach. But 83 per cent of investors indicated it would have a major impact and 68 per cent said it would influence their decision to buy or sell shares in the company.

Negative publicity and damage to their brand are what companies think would be the major effects of a security breach. Around 84 per cent of companies think a breach could adversely affect their brand, while 86 per cent highlighted negative publicity as their main concern. Opinion is less divided on this issue, with 61 per cent of investors believing that a security breach would damage a company's reputation.

The LogicaCMG survey also highlighted consumer concerns, with 24 per cent of respondents saying they would move their business to a competitor if a company were involved in a security breach; 23 per cent said they would never make a purchase from the offending firm again, and one in 10 said they would tell friends to steer clear.

"These research findings illustrate the wide gap between business leaders and investors views about the importance placed on information security governance," said Dave Martin, UK principal security expert at LogicaCMG. "It's not just abut damage to the brand, but also damage to the share value and market capitalisation and this realisation should prompt business leaders to take a more holistic approach to information security governance.

"Unless a company can illustrate that it has sound governance of its information assets, it is exposing itself to potentially severe consequences from consumers, shareholders and regulators alike."

© ENN

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