Jim Kaitz, President and CEO, AFP
The title of tech giant and leading business innovator Andrew Grove's autobiography is Only the Paranoid Survive. The longtime Intel chief's observation served as an apt theme at the Association for Financial Professionals' (AFP) most recent annual conference.
More than 6,500 attendees heard some of the world's leading experts discuss cybersecurity, the economy and other geopolitical issues, particularly the repercussions these matters have on business—and the finance profession. Three important messages emerged from our 2014 conference:
- Cybercrime is only going to get worse.
- Finance professionals must do all they can to help combat this growing threat.
- Despite the ominous-sounding news, there are still glimmers of hope on the economic horizon.
Cybercrime is not only becoming a more serious threat, but cybercriminals are growing ever more cunning, wily and resourceful. According to former NSA Director Gen. (Ret.) Keith B. Alexander, “the worst is yet to come.”
Alexander, who is also former commander of U.S. Cyber Command, estimated cybercrime costs at approximately $445 billion a year. The commercial sector is particularly vulnerable, he said, noting that cybercriminals are “not using [their skill] to attack our government; they're using it to attack [businesses and consumers].” He cited cyber assaults on J.P. Morgan, Target and Home Depot as only a few recent examples.
Despite the gloomy outlook, however, Alexander noted that there are resources available to build reinforcements in the cyber wars and help thwart attacks, including training and collaboration. “Teamwork within industries and among sectors—and getting the tech community together—is going to be a big part of how we stop this,” he said.
One Step Ahead of the Bad Guys
Battling cybercrime certainly won’t be easy. Determined hackers have a way of consistently staying ahead of even the most tech-savvy businesses. Another AFP conference speaker, FBI Special Agent Clyde Ellis said, “The cyber threat is constantly changing.” Like Alexander, Ellis stressed the need for organizations to share information—internally and externally—to help win the cyber war. Treasury and finance in particular, he said, have important roles to play.
“There could be something that [finance and treasury] see that someone else doesn't,” Ellis said. “And unless we’re talking, we don't know. We have to be sharing information with our communities.”
Even with a looming cyberthreat, businesses seem to be doing little about it. A brief survey AFP conducted during the conference revealed mixed results on cyber protection. While 62% of companies have been subject to an actual or attempted cyberattack within the past year, only 15% have increased spending on cyber insurance. The survey revealed that only 6% of companies that never had cyber insurance are now carrying it. Further, those investing in cyber insurance are doing so only modestly. A much larger margin—31% of conference attendees—said their organization doesn't carry any cyber insurance. However, the survey also showed 71% of the 970 respondents increasing spending specifically toward mitigating cyberattacks, a quarter of them by 50%.
And Now the Forecast
Cyberthreats aside, there is some good news on the business/treasury/finance horizon. The U.S. economy appears to be gaining steam, and one of the world's leading experts confirms that forecast. Former Federal Reserve Chairman Ben Bernanke told a packed house that the U.S. is “the envy of other industrial countries at this point.”
“We have seen a slow process, but one that now seems to be showing an economy that has been turning to more normal conditions,” Bernanke said, pointing to three critical economic bellwethers:
- Favorable demographics—A relatively young workforce, healthy immigration and growth.
- Advanced technology and education—A majority of the top 20 universities in the world in the U.S.
- Highly entrepreneurial culture—A healthy influx of startups and new companies creating growth and opportunities.
Taking the good with the bad and remaining flexible in a “consistently inconsistent” economy separates good finance professionals from great finance professionals. As we head into the holiday season and a new year, I urge people in the profession to stay smart, vigilant and connected.