By Matthew Snow & Marc Blythe
After a cyberattack, businesses become stuck in a complex, chaotic maze of financial, operational and reputational challenges. The immediate concerns must be on securing the breach and assessing the scope of its impact. However, businesses should not wait for the dust to settle before focusing on the daunting task of financial recovery. This is where accounting professionals become invaluable allies.
Accounting experts play a critical role in guiding businesses through the financial aftermath of a cyber incident. Their work includes assessing and mitigating the economic damage from the cyberattack, including assisting with insurance claims, conducting forensic accounting and helping to restore financial operations. Accounting professionals also play a key role in shoring up systems to help prevent another cyber incident.
Unfortunately, businesses of all types and sizes are vulnerable to attacks, putting clients and customers — and their own existence — in jeopardy. With the average cost of a data breach reaching $4.45 million and the number of these attacks growing each year, ensuring the accounting team is looped in immediately after a cyber incident will mitigate a business’s financial damage and get it back on track as soon as possible.
The Seven Ways an Accounting Expert Helps After a Cyberattack
1. Assessing the Financial Impact
Quantifying the cyberattack’s financial impact involves more than just tallying the direct costs of remediation efforts; it requires a comprehensive evaluation of indirect costs, including lost revenue, operational downtime, legal fees and reputational damage. Accounting experts employ forensic accounting techniques to trace and quantify these losses, providing a clear picture of the cyberattack’s total financial toll on the business.
2. Navigating Insurance Claims
For many businesses, cyber insurance helps mitigate the financial impact of cyberattacks. However, navigating the claims process can be complex and fraught with pitfalls. Accounting professionals, with their deep understanding of the intricacies of insurance policies and the cyber incident’s specifics, can spearhead the claims process. They ensure that all losses are accurately documented and that claims are submitted in compliance with policy requirements, maximizing reimbursement potential.
3. Forensic Accounting and Fraud Detection
Cyberattacks, particularly those involving data breaches, can lead to fraudulent activities, including unauthorized transactions and identity theft. Forensic accountants can uncover and investigate these fraudulent activities and help businesses identify the extent of financial fraud, trace any misappropriated funds and provide the evidence necessary for legal action or claims.
4. Restoring Financial Operations and Controls
One critical role accounting professionals play post-cyberattack is helping businesses restore financial operations and internal controls. This includes re-establishing secure payment processes, reinstating financial data integrity and redesigning internal controls to mitigate future risks. Accountants help ensure that businesses recover operationally and also strengthen their financial infrastructure against future threats.
5. Strategic Financial Planning and Risk Management
Recovering from a cyberattack extends beyond immediate financial remediation; it encompasses reevaluating the business’s strategic financial planning and risk management approaches. Accounting professionals are instrumental in this process, advising on resource allocation to bolster cybersecurity measures, adjusting financial forecasts to account for the cyberattack’s long-term impact and integrating cyber risk management into the broader organizational risk management strategy.
6. Regulatory Compliance and Reporting
In the aftermath of a cyberattack, businesses may face regulatory scrutiny and reporting obligations, particularly if sensitive customer data is compromised. Accounting experts ensure that businesses comply with relevant cybersecurity regulations and reporting requirements, helping to mitigate legal and regulatory risks. By facilitating transparent and compliant reporting, they also play a crucial role in restoring stakeholder trust.
7. Building Resilience for the Future
Beyond immediate recovery efforts, accounting professionals help businesses build financial resilience against future cyber incidents. This includes conducting post-incident reviews to identify lessons learned, advising on improvements to cyber insurance coverage and participating in the development of comprehensive business continuity and disaster recovery plans. Their insights into the financial aspects of cybersecurity enable businesses to make informed investments in technologies and practices that reduce vulnerability to future attacks.
The financial aftermath of a cyberattack can be as devastating as the attack itself. However, with the expertise of accounting professionals, businesses can navigate the complex process of financial recovery more effectively and play a pivotal role in helping companies rebound and thrive. Their contributions are not just about mitigating losses — they pave the way for a secure and prosperous future in an increasingly digital world.
- Leasing Company – Operating system and back-ups were hacked and access was denied by cyber-attackers until ransom paid. BGA assisted in determining amounts to claim for restoration activities and business interruption, under the Company’s cyber insurance policies.
- Software Technology Company – Provided technical accounting support during financial audit procedures requiring memorandums over SAB 99 and SAB 108.
- Healthcare Company – Debt convenance analysis requiring exchangeable senior note conversion; technical memorandum documenting impact and accounting treatment.
- Clothing Retail Company – System development lifecycle documentation and IT general controls support.
- Clothing Retail Company – Internal expense reimbursement theft remediation; forensic accounting and Audit Committee Board procedures/presentation.
- Manufacturing Company – Victims of a cyberattack. Two months of accounting data was lost. BGA helped rebuild the books and records to ensure the audit could be completed on the original timeline successfully.
- Medical Device Company – Company is working towards an IPO. Blythe assisted with audit prep, SOX prep, interim controllership work, valuation and tax provision assistance.
Marc is a result-oriented professional with a broad range of leadership experience in complex multi-national private and public companies. He has over 20 years of experience at Ernst & Young, including work at the national office designing and implementing the firm’s audit process and creating industry-specific tools, templates and knowledge bases that assisted E&Y executives worldwide.
Executive accounting, auditing and finance professional with over 30 years of experience assisting companies with accounting matters, financial reporting, auditing, internal control policies and procedures, and financial analysis.
Blythe Global Advisors is an accounting advisory firm with a difference. We have a proven track record of helping companies – from startups to brand-name enterprises, U.S.-based and international – fill the gap in accounting and financial expertise. Whether you need help with a simple financial statement or a complex business combination, we offer customizable, flexibly priced solutions that we deliver via our world-class service delivery process.