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The Business Case for Preparedness
Direct Revenue Opportunities
May 24, 2008 12:18 AM
Increasingly the financial services industry has taken a strategic approach to corporate resilience and security, integrating it into all significant business decisions. The result has been competitive benefits including, increased efficiencies, cost savings, loss avoidance, productivity enhancements, reputation protection, regulatory compliance, and direct revenue opportunities.
Institutions with certain levels and kinds of security investments are also likely to have better bond ratings, lower insurance costs, and few or no punitive actions from regulators. As Basel II is implemented, there will also be benefits from lower capital requirements based on technology risk management."
Source: "Competitiveness and Security: Financial Services Sector Study", BITS and the Santa Fe Group, Council on Competitiveness, 2006
Key Points:
* This study provides insight into the financial services industry's perspective on security and business models. It addresses the questions: What synergies exist between security and competitiveness in the financial services industry, and what are best practices for achieving those benefits? Competitiveness includes strategic benefits from cost savings, productivity enhancements and revenue opportunities."
* The study examines the concept that productivity and revenue potential are enhanced by a strategic approach to security. Security has historically been viewed as a cost of doing business, but, increasingly, financial services firms are integrating security choices into all significant business decisions. The industry is realizing that corporate business strategies need to incorporate security on an enterprise-wide basis. Strategies need to be coordinated, top-to-bottom and end-to-end, for the greatest competitive benefits, which include increased efficiencies, cost savings, loss avoidance, productivity enhancements, reputation protection, regulatory compliance, and direct revenue opportunities."
* Recent events and trends illustrate another dimension to security: cross-sector vulnerabilities and interdependencies. Security issues cannot be dealt with in a vacuum. The resilience, productivity and competitiveness of the Nation's economy requires increasing attention to interdependencies between sectors, particularly in times of crisis. Telecommunications, energy, information technology and transportation are particularly important to the financial services sector."
* The extent to which the insurance industry takes investments in security into consideration also reflects evolving business attitudes. The insurance industry is beginning to value investments in cyber security. Premiums should ultimately reflect this valuation. The notion is that by reducing risk, a firm likewise reduces costs."
* In December of 2003, BITS surveyed its members on the costs of addressing software vulnerabilities, including managing software patches. We found that: Software vulnerabilities are approaching a cost of $1 billion annually to the financial services industry."
Link: http://www.compete-resilience.org/upload/Financial-Services2.pdf