Nearly 60 percent of retail companies describe their cyber security exposure as "significant," "serious," or "critical," but another 9 percent are not reporting any cyber security exposure at all, according to a report published Wednesday.
According to a study of filings with the Securities and Exchange Commission conducted by risk advisor and insurance broker Willis Group Holdings, almost a tenth of retailers have not reported any cyber risk in financial documents filed with the SEC, which has required such reporting since Oct. 2011. The report describes the non-disclosure as "surprising," given the high-profile breaches recently discovered at retail chains such as Target, Michaels, and Neiman-Marcus.
Among those that did report cyber exposure, the top three risks cited were privacy/loss of confidential data (74%), reputation risk (66%), and cyber liability (61%). Cyber risk at the hands of outsourced vendors ranked at just 9%, a result Willis also describes as "surprising," given the level of outsourcing across the sector and retailers' heavy reliance on third-party technology partners.
Almost half (49%) of retail companies cited the use of technical safeguards as a chief remedy for cyber risk -- more than the Fortune 1000 as a whole (43%), the report states. However, 17% of retail companies reported inadequate resources to limit cyberlosses.
Less than one tenth (9%) of the retail sector indicated that they have purchased insurance for cyber exposures.
Chris Keegan, senior vice president for e-risk at Willis North America and co-author of the report, says the retail industry is "slightly behind the curve" in protecting itself against cyber security threats.
"A series of recent high-profile cyber breaches has pointed a government spotlight at the sector, and Willis expects this scrutiny to continue," Keegan says. "Our advice for retailers is: Don’t wait for the SEC to come knocking on your door."
