Australian Companies Failing to Report on Cyber Security

According to a new report published today, the majority of newly listed Australian companies are failing to communicate their strengths in cyber resilience, which may deter current and potential investors.

According to RSM Australia’s latest research, thinkBig Cyber Security, less than 20% of the 147 firms that listed on the ASX over the 2020–21 financial year mentioned cyber security in their first annual reports.

 

While the number of initial annual reports by ASX debutants mentioning cyber security has increased over the previous three years—from 6% in 2018–19 to 11% in 2019–20 and 18% in 2020–21—the quality and depth of reporting has remained continuously poor.

Only 6% of the 271 annual reports examined over the course of three years, according to Darren Booth, National Head of Cyber Security and Privacy Risk Services at RSM, showed a thorough commitment to minimizing cyber risks.

Investors are becoming more and more conscious that businesses that forego investing in cyber security run a larger chance of suffering significant monetary and reputational losses, according to Mr. Booth.

The perception could be that the company has not sufficiently taken into account the risk of cyber security-driven litigation, claims, fines, penalties, and reputational damage, he said. “By omitting evidence of cyber resilience from annual reporting, or simply acknowledging an awareness of the risks without detailing proactive mitigation measures, or both,” he said.

This notion may not be accurate because well-capitalized businesses frequently include cyber security from the beginning, particularly if seasoned directors and investors are urging the founders to consider cyber resilience before they even launch. However, less well-funded companies frequently believe they are of little interest to cybercriminals, but this is simply untrue.

The hazards are quite serious for Australian enterprises of all sizes, with 67,500 cybercrimes reported to the Australian Cyber Security Centre (ACSC) in 2020–20211 and a 310 percent increase in calls to the Centre’s cyber security hotline from the previous year.

Internationally, NASDAQ-listed businesses who had a breach underperformed the market over the ensuing three years by -15.6 percent.

Andrew Clifford, Director of Corporate Finance at RSM, has extensive experience working with businesses seeking to list or go public and is aware of the devastating effects cyberattacks can have on businesses, especially startups.

Cyberthreats, such as viruses, have existed since the beginning of the digital era, but Mr. Clifford said that the idea that organizations should be legally obligated to preserve and utilize the data they collect responsibly has been slow to catch on.

‘Organisations are now accountable for notifying any cyber breaches to customers and must alert the Office of the Australian Information Commissioner (OAIC),’ he said. “With the massive movement of business online and the increase in the acquisition and storage of personal data,’ he added.

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Noah Murphy
Noah Murphy
If Life is just a game and luck is for losers - Then I am winning the game

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