Cyber Security Myths Busted: What Every Private Equity Investor Should Know

Introduction

Cyber threats are evolving rapidly, becoming increasingly sophisticated. Misinformation can create a false sense of security, posing significant risks to your investments. To navigate these complex challenges effectively, private equity investors must understand the realities behind common cyber security myths and implement best practices for comprehensive data protection.

This article simplifies ten prevalent cyber security myths, providing you with the critical knowledge needed to protect your portfolio companies from digital threats. By separating fact from fiction, we enable you to confidently address the cyber security challenges of today’s business environment.

Cyber Security Myth #1: Cyber Security isn’t Something I’m Responsible for

Myth: Cyber security is solely the IT department’s responsibility.

Fact: Cyber security is a shared responsibility across the entire organisation. From CEOs to interns, every individual’s actions impact the overall security of the company. The 2023 Verizon Data Breach Investigations Report reveals that 74% of breaches involve human error, including social engineering attacks, mistakes, or misuse.

Implication for Private Equity: Ensuring that all employees in your portfolio companies are educated about cyber security is crucial. The human element is often the weakest link in the security chain, making it a prime target for cyber threats. By fostering a culture of cyber security awareness, you can significantly reduce the risk of breaches.

Actionable Insight: Implement comprehensive employee education programmes to raise awareness about cyber security risks and best practices. Equip your workforce with the knowledge to recognise and mitigate potential threats, thereby strengthening the human firewall that serves as the first line of defence against cyber attacks.

Cyber Security Myth #2: Small Companies aren’t Targeted by Hackers

Myth: Hackers only target large corporations like Facebook, Uber, and IBM.

Fact: Small businesses are frequently targeted by cyber threats. The UK Government’s 2023 Cyber Security Breaches Survey found that a substantial 32% of small businesses reported falling victim to a cyberattack in the past 12 months. Smaller companies often lack the robust security measures of larger corporations, making them attractive targets for hackers.

Implication for Private Equity: Ensuring that your smaller portfolio companies have strong cyber security measures is crucial. The financial and operational impact of a cyberattack on small businesses can be devastating, potentially leading to closure.

Actionable Insight: Invest in cyber security consulting services to assess and enhance the security posture of smaller portfolio companies. These services can recommend and implement tailored defences, helping small businesses navigate the cyber threat landscape with resilience and protecting their investments from significant risks.

Cyber Security Myth #3: My Passwords will Keep me Secure

Myth: Robust passwords alone make your digital assets invulnerable to breaches.

Fact: Relying solely on passwords is insufficient. The Account Takeover report revealed 24 billion compromised username and password combinations on the dark web, up from 15 billion in 2020. The key to security lies in the length of the password, not just its complexity. Longer passwords, especially those crafted from memorable phrases, significantly increase the time required for a successful breach.

Implication for Private Equity: Ensuring that portfolio companies adopt strong password policies is essential. However, even robust passwords are vulnerable if the service provider is breached.

Actionable Insight: Implement Multi-Factor Authentication (MFA) across your portfolio companies. MFA adds an additional layer of verification, such as a security code sent to a phone or accessed through a verification app, making it much harder for hackers to gain access even if they have the password. This step is crucial in securing digital assets and protecting your investments.

Cyber Security Myth #4: To Protect My Business, We Only Need Basic Anti-Virus

Myth: Basic anti-virus programmes are sufficient to protect against online threats.

Fact: Basic anti-virus software is inadequate against sophisticated cyber threats. According to Tech.co, the average ransomware demand in 2023 is $1.5 million, and over 80% of those who pay a ransom face repeat attacks. This highlights the urgent need for comprehensive cybersecurity measures.

Implication for Private Equity: Relying solely on basic anti-virus software leaves portfolio companies vulnerable to advanced threats. A more robust, multi-layered security approach is essential to protect your investments.

Actionable Insight: Implement a multifaceted cyber security strategy that includes specialised technologies to combat specific threats like ransomware. Ensure all security solutions—endpoints, firewalls, network connections, and emails—work together seamlessly. Additionally, incorporate backup and disaster recovery solutions to enhance resilience and mitigate potential issues. This comprehensive approach will help your portfolio companies withstand and overcome the complex challenges of today’s cyber threat landscape.

Cyber Security Myth #5: Macs are Immune to Viruses and Malware

Myth: Macs are immune to cyber threats.

Fact: The notion that Macs are invulnerable to viruses and malware is a myth. As the Mac user base grows, so does the attention from cybercriminals. The Moonlock Mac Security Survey 2023, found that over 50% of respondents had been affected by malware, hacking, or scams.

Implication for Private Equity: Ensuring that all devices within your portfolio companies, including Macs, have robust security measures is essential. Macs face significant threats such as Trojans, Adware, and Potentially Unwanted Applications (PUA). Trojans, particularly those exploiting unpatched vulnerabilities, pose a substantial risk.

Actionable Insight: Encourage regular software updates and the installation of security patches on all Mac devices within your portfolio companies. Implement comprehensive security solutions that address the specific threats Macs face. This protective approach is crucial to maintaining robust cyber security across all platforms and protecting your investments.

Cyber Security Myth #6: Using Password-Protected Public Wi-Fi is Safe

Myth: Password-protected public Wi-Fi networks are secure.

Fact: The presence of a lock icon next to a public Wi-Fi network does not guarantee security. Hackers can easily intercept data on these networks. A Forbes study revealed that 40% of respondents had their information compromised while using public Wi-Fi.

Implication for Private Equity: Ensuring that employees in your portfolio companies understand the risks associated with public Wi-Fi is crucial. Data breaches on public networks can lead to significant financial and reputational damage.

Actionable Insight: Implement the use of Virtual Private Networks (VPNs) across your portfolio companies. A VPN creates a secure, encrypted tunnel between the user’s device and the internet, protecting data from potential hackers. Educate employees about the risks of public Wi-Fi and the importance of using VPNs to protect sensitive information.

Cyber Security Myth #7: Only Certain Industries are Vulnerable to Cyberattacks

Myth: Cybercriminals only target specific industries, and some companies don’t have data worth stealing.

Fact: Cyber-attacks can affect any business, regardless of industry or perceived data value. Hackers target businesses of all sizes and sectors, including finance, charities, and insurance providers. A hacker attack occurs every 39 seconds, highlighting the pervasive nature of cyber threats.

Implication for Private Equity: All portfolio companies, regardless of industry, are potential targets for cyberattacks. The misconception that certain industries are immune can lead to inadequate cyber security measures, increasing vulnerability.

Actionable Insight: Ensure that all portfolio companies implement robust cyber security measures, regardless of their industry. Educate them on the indiscriminate nature of cyber threats and the importance of proactive cyber security practices. This approach will help protect your investments from cyberattacks.

Cyber Security Myth #8: I Will Know Straight Away if My Business is Attacked

Myth: Immediate detection of a cyberattack is guaranteed.

Fact: Hackers often aim to remain undetected for as long as possible to maximise the damage. According to the IBM Cost of a Data Breach Report 2023, the average time to identify and contain a data breach is 204 days. Cybercriminals have evolved to use more covert tactics, making their activities less noticeable.

Implication for Private Equity: Delayed detection of cyberattacks can lead to significant data loss and financial damage. Relying on obvious signs of an attack is insufficient.

Actionable Insight: Implement continuous monitoring and advanced threat detection systems across your portfolio companies. Regularly update and review security protocols to ensure they can identify and respond to threats promptly. This proactive approach is essential to minimise the impact of cyberattacks and protect your investments.

Cyber Security Myth #9: It is Easy to Spot Phishing

Myth: Most people believe they can easily identify phishing emails and are safe from online fraud.

Fact: Phishing attacks have become highly sophisticated. According to a report by Digital Guardian, 90% of corporate security breaches result from phishing attacks. Vigilance is not just advisable; it is essential.

Implication for Private Equity: The deceptive nature of phishing emails means that employees at all levels, regardless of their expertise, can be targeted. This poses a significant risk to portfolio companies.

Actionable Insight: Implement comprehensive phishing awareness and training programmes across your portfolio companies. Educate staff on the latest phishing tactics and the importance of scrutinising hyperlinks and email content. Regular training and simulated phishing exercises can enhance employees’ ability to recognise and avoid phishing attempts, thereby protecting your investments from potential breaches.

Cyber Security Myth #10: Security Costs too Much

Myth: Adequate cyber security demands a significant investment of money and resources, making it too costly.

Fact: The cost of a security breach far exceeds the investment in preventive measures. According to IBM, the average total cost of a ransomware breach is $5.13 million, a 13% increase from 2022 and significantly higher than the average data breach cost of $4.45 million. Cyber security is not just an expense; it’s a strategic investment.

Implication for Private Equity: Viewing cyber security as too costly can lead to severe financial and reputational damage. The rising use of connected devices and remote work increases the risk of breaches, making robust cyber security measures essential.

Actionable Insight: Prioritise cyber security investments across your portfolio companies. Allocate resources proactively to implement comprehensive security measures, mitigating potential financial and reputational risks. Investing in cyber security now can prevent far greater expenses associated with cyberattacks, including data breaches, regulatory fines, and legal fees. This strategic approach ensures resilience and sustained business integrity.

Simplifying Cyber Security for Your Investments

Staying ahead in cyber security is essential. Recognising and addressing common cyber security myths is the first step in protecting your portfolio companies and investments. Tailored specifically for private equity investors, our cyber services ensure your investments are protected 24/7, allowing you to focus on what you do best—growing your portfolio. Book a discovery call today to learn how we can simplify your cyber security operations.