Institutional investors shy away from hacked businesses

Large investment firms are reluctant to put their money into businesses that have been hacked and appear to lack cyber security skills

Large investment companies are reluctant to put their money into businesses that have been hacked and appear to lack cyber security skills and knowledge.

KPMG research of 133 global institutional investors found 79% would be discouraged from investing in businesses that had been hacked.

The research revealed that the investors – which collectively manage over $3tn in funds – think less than half of the boards at the businesses they invest in have the right skills to manager cyber risk.

It said 43% believed board members had unacceptable levels of skills and knowledge to manage innovation and risk in the digital world; and 86% of investors wanted boards of the companies they invest in to spend more time considering cyber security.

“Investors see data breaches as a threat to a company’s material value and feel discouraged in investing in a business that has had its sensitive information compromised,’ said Malcolm Marshall, global leader of KPMG’s cyber security practice. 

Read more about high-profile cyber attacks

Investors expect boards to sharpen skills

“There is an expectation from investors for businesses to increase their cyber capabilities from top to bottom – including the board.”

KPMG said companies were struggling to demonstrate to their existing and potential investor base that they took cyber risk seriously. “The inability to demonstrate that a business is doing so could make it a less attractive investment proposition," said Marshall.

“Following a number of high-profile breaches, we are seeing global investors waking up to the issue of cyber security.” He said this is leading to investors putting their money into cyber security businesses. 

“The ripple effect of this has seen investor appetite for cyber businesses increase, with the survey revealing that 86% of investors see it as a growth area,” said Marshall.

Read more on IT for financial services

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