Cyberattacks are on the rise, and companies are paying attention, new research finds.
Lloyd's of London released its third biennial Risk Index, a survey revealing that executives worldwide are prioritizing short-term risks, such as cyberattacks, over long-term strategic decisions.
Following a series of high-profile cyberattack incidents in 2011, cyberrisk has become the second-highest perceived risk for U.S. and Canadian business leaders. Worldwide, cyberrisk has jumped from the 12th-highest to the third-highest perceived risk since 2011. According to the researchers, in comparison to the 2009 and 2011 Risk Index, the current results suggest that businesses previously underestimated both the impact of and their vulnerability to cyberattacks.
Yet the survey also showed that businesses still don't feel adequately prepared to deal with an actual cyberattack: Cyberattacks fell in the No. 21 spot on the risks companies are prepared to handle. Based on the results, company size is the biggest factor in these types of risk perception and management.
"A clear divide is emerging in the evolution of risk management between smaller and larger companies," the researchers wrote.
For instance, whereas large and small companies had similar outlooks on prioritizing and preparing for risks in 2009, smaller companies now give all risks lower priority than larger companies.
Nonetheless, the survey also revealed that, in the last five years, risks ranked higher on companies' priority list are also given higher priority in terms of preparedness, while low-priority risks are given less preparation.
Overall, the top five risks, according to the survey, are high taxation, loss of customers, cyberrisk, price of material inputs and excessively strict regulations. Although these are all valid concerns for businesses, Lloyd's CEO Richard Ward warned that prioritizing short-term risks should not take away managing risks in the long run.
"With the timetable for global economic recovery likely to be much longer than we hoped, a focus on long-term sustainability and effective risk management should be a priority for boards across the world," Ward said in a statement.
The Lloyd's Risk Index 2013 is based on a survey of more than 500 C-level and board-level executives worldwide. It was conducted by Ipsos MORI, a U.K.-based market research firm, for Lloyd's during April and May.
Originally published on BusinessNewsDaily.