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ICFE eNEWS #19-16 - April 12th  2019

Cyber Risks Could Impact Credit Ratings
By Yan Ross, Director of Special Projects, ICFE

Tax season is always a good time for a review and reminder about the relationship between cyber risks and credit ratings. While this correlation comes up periodically in research and discussions about small and medium-size businesses (SMEs), it is often overlooked as other operational issues are addressed by management.
Over the past several years, both Moody's and Standard & Poor's (S&P) have confirmed that their credit ratings protocols include factoring in the action, or inaction, of companies to respond to the growing challenge of cyber exploits. Due to a widely perceived notion within the sector of SMEs, it appears that they tend to assign low priority to cyber risk management.
Unfortunately, this "myth" about SMEs as targets for cyber criminals appears to prevail" that they are of little interest because of the smaller volume of sensitive customer information they collect and maintain. Nothing could be further from the truth, since cyber thieves are well aware that the failure of many SMEs to engage in meaningful cyber risk management results in their increased vulnerability – to the criminals, they are just "low hanging fruit."
That is why it is so important for enterprises of all sizes need to make a mindful determination of which cyber risks to retain and which to lay off on third parties. In addition to internal risk management techniques, preparation for and acquisition of insurance coverage is a more and more common alternative to simply retaining liability for any and all risks.
In terms of meeting working capital needs, this risk assessment and management exercise can pay off in immediate benefits. When a potential lender considers the risk associated with making a business loan to a SME, the credit rating agencies serve a basic function in providing information to lenders on the nature and magnitude of risks. Falling victim to cyber exploit, such as a data breach or ransomware demand, can adversely affect ability of a company to meet debt obligations – or even to continue as a going concern.
Whether immediate or long-term effects are in play, the costs of failing to integrate a cyber risk management plan are easily seen to outweigh the positive effects of implementing one

 Here are some of the basic elements:

  • Board and Management commitment to undertake a risk assessment and cyber security program throughout the entire organization; deliberate decisions on which risks to retain and which to insure against are required.
  • Information technology ("IT") baseline evaluation of vulnerabilities and responses; commitment to participate in training exercises with Human Resources to assure both parts of the organization are fully engaged.
  • Human Resources ("HR") full involvement in a program of training for all employees with any form of access to the company network; both the on-boarding process and continuing periodic training are mandatory.
  • Seek evaluation and bids from several cyber insurance carriers, to determine the nature of the risks subject to coverage and the internal requirements to obtain and maintain such coverage; outside counsel and advisers may be useful to assist.
These basic steps will help SMEs on the road to bringing cyber threats and loss prevention into a manageable perspective. While there may be no 100% effective protection or cure, the likelihood of sustaining an event which threatens the very existence of the company will be minimized, and the likelihood of obtaining financial support at reasonable rates and terms will be maximized.

For additional resources on specific ways to address this challenge, ICFE directs your attention to the Certified Identity Theft Risk Management Specialist® (CITRMS®) XV course and the CITRMS® Textbook and Desk Reference

Yan Ross Bio PhotoYan Ross is ICFE's Director of Special Projects, and the author of the Certified Identity Theft Risk Management Specialist ® XV CITRMS® course. As an accredited educator for over 20 years, he has addressed Identity Theft Risk Assessment and management for consumers, organizations holding personally identifiable information, and professionals who work with individuals and organizations who are at risk of falling victim to identity thieves.

The ICFE's Certified Identity Theft Risk Management Specialist ® XV CITRMS® course is now available both in printed format and online.

The Textbook and Desk Reference edition of the course book is also available online. Bulk pricing and discounts for veterans and students available. Inquire at yan.ross@icfe.info

Paul S Richard PhotoICFE eNEWS is available FREE upon request by visiting our Web site and filling out the contact form, and selecting "Yes" for "Add to Mailing List. Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:

Paul S. Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation and founder of the College for Financial Planning in Denver, CO.) The ICFE is dedicated to helping consumers of all ages to improve their spending practices, increase savings and use credit more wisely.

The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its financial continuing education courses programs and resources. In addition to eight Certification courses covering identity theft, credit files, credit repair and credit scoring, among others, it also publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE is a partner with the national Jump$tart Coalition for Financial Literacy and the California Jump$tart chapter. The ICFE staff is also active with San Diego Saves and Military Saves, both offshoots of America Saves.

The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

The ICFE helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G library, a free eNews service, and an online resource center for students, parents and educators, plus financial education learning tools in the ICFE Book Store.

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