One of the pivotal responsibilities of the executive team within an organization is the establishment and ongoing evaluation of its goals. These objectives often take the form of a financial forecast, which serves as an operational roadmap to guide execution and set expectations for what will be accomplished. Leadership typically set revenue and profitability targets to guide the annual budgeting and forecasting process. Subsequently, individual teams and departments collaboratively construct a comprehensive, bottom-up strategy designed to actualize these set targets.
With the initial bottom-up plan defined, mature organizations proceed through a healthy process where executives haggle over resource asks and predictions of value to be delivered. Business cases are developed and debated to harden estimates and assumptions so that an optimal decision can be made as to what resources should be allocated where. After the final plan is defined and plans are put in motion, incremental results are compared to expectations to understand if the plan is intact, or if adjustments need to be made.
Throughout the process, decisions are made to allocate the right resources towards the most viable activities that deliver on the goals set forth. This concerted effort is anchored by the creation of a financial plan that not only steers the organization's operations for the impending year, but also provides leadership with the necessary tools to communicate and manage expectations with both internal and external stakeholders.
As a natural byproduct, business leaders find themselves in the position of also managing a related and complex risk environment. Risk is primarily gauged by its potential impact on the previously established goals and specifically around how unforeseen risks could potentially influence execution of the plan. Leadership plays a crucial role in clearing the path for the team's execution, continuously identifying and mitigating unexpected obstacles while keeping the core goal intact: meeting or surpassing revenue and profitability goals.
For many organizations, the forecast functions as the benchmark against which various risks are assessed. Do you have the right personnel in place to execute the plan (i.e., human resources risk)? Do you possess the requisite cash flow to adhere to your spending plan (i.e., financial risk)? Do you have enough supply to meet production targets (i.e., supply chain risk)? Cyber risk must be approached and evaluated in a similar fashion.
To bring this to a more current context, let’s examine the recent Clorox cyber incident. The forecast was made and expectations set, and yet a cyber incident has resulted in an impairment of revenue of upwards of 28% for the last quarter. As the forensics continue of what occurred, an undoubtable outcome of the investigation will reveal more could have been done to avert such a deviation from plan. Investments could have been reallocated to reduce not just the probability but also the scale of the revenue hit. Hindsight is always 20/20, but what if Clorox had better visibility into both the totality of their risk environment and into the revenue impact of its cyber investments? How might that have informed their resource allocation decisions?
At Pellonium, our innovative approach allows the organization to centralize its security efforts around what is most pertinent to the business, thus reshaping the perception of cybersecurity from being a mere cost center to a potent revenue enabler for the organization. Cyber risk can be understood relative to its impact on the forecast. The platform enables security leaders to harmonize cyber risk with other enterprise risks, offering valuable insights for prioritization and focus and engaging the entire organization in the process.
For more information on how we can help you align your cyber risk awareness with your forecast, contact us.
