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88% of High-Uncertainty Firms Report Significant Cybersecurity Risks

DATE POSTED:January 30, 2025

Cybersecurity is a major concern for CFOs of middle-market firms, especially those facing high uncertainty due to fluctuating demand, supply chain disruptions, or macroeconomic volatility. These challenges create financial strain and long-term strategic setbacks.

According to a PYMNTS Intelligence report, “Cybersecurity Risks Cause Middle-Market CFOs to Cancel Innovation Plans,” 88% of firm in high-uncertainty environments report significant cybersecurity risks, double the 42% of average firms. The report explores how firms are managing these risks and their impact on growth.

High Uncertainty Heightens Cyber Risks

Firms operating in uncertain environments face an amplified sense of urgency when it comes to cybersecurity. While 42% of middle-market CFOs express high levels of concern about cybersecurity risks in general, the share jumps to 88% for firms experiencing high levels of uncertainty. This disparity underscores the increased difficulty that these firms face in managing the unpredictable nature of their operational environments and the increased threat of cyberattacks.

According to the report, high-uncertainty firms are more likely to establish dedicated cybersecurity teams — 46% versus 22% for firms with lower uncertainty levels. The effects of cyber risks extend beyond internal operations: high-uncertainty firms report greater losses in revenue (38% versus 27% for average firms) and missed opportunities (44% versus 30%) due to cybersecurity breaches. This demonstrates how volatility compounds the financial and operational strains of cybersecurity threats.

Financial Strains From Cyber Risks

While addressing cybersecurity threats requires investment, middle-market firms often struggle to keep up with the financial toll. Consider 72% of firms overall are concerned about direct financial losses due to cyberattacks, a concern that becomes even more acute in high-uncertainty environments, where 88% of CFOs report such fears. The costs of mitigation efforts, such as investing in new security measures or employee training, add further financial strain. High-uncertainty firms are more likely to report both substantial mitigation costs and significant losses due to cyber incidents.

Additionally, 72% of firms across the board cite mitigation costs as a burden, with high-uncertainty firms experiencing more financial pressure. These figures highlight the disproportionate financial burden placed on firms already contending with unpredictable business conditions, further complicating their ability to allocate resources for long-term growth.

Cybersecurity Delays Advancement

Another impact of increased cybersecurity risks is the disruption of technological initiatives. Many firms are forced to delay or cancel innovation projects due to cybersecurity concerns.

The report finds that 32% of firms frequently postpone or abandon tech initiatives because of cybersecurity threats. This issue is more pronounced for firms in high-uncertainty environments, with 81% of CFOs reporting delays or cancellations of innovation efforts.

These delays can have long-term ramifications, eroding competitive advantage and hindering growth. Specifically, large firms with revenue between $400 million and $1 billion face even more severe disruptions, with 38% reporting frequent tech initiative delays.

As a result, firms in unstable environments must manage the need for stellar cybersecurity with the need for technological innovation, creating a delicate balance that can hinder their growth potential.

The post 88% of High-Uncertainty Firms Report Significant Cybersecurity Risks appeared first on PYMNTS.com.