7 Tips for Navigating Cybersecurity Risks in M&As

Data breaches: The integration phase in an M&A significantly increases the risk of data breaches. As systems and data from two different organizations are merged, vulnerabilities can be exploited, leading to unauthorized access. To combat this challenge, organizations should adopt a phased integration approach and maintain continuous security monitoring. It's also critical to have a solid incident response plan ready to quickly address any potential breaches.

Limited due diligence: Skipping a thorough assessment of the cybersecurity posture of the acquisition target can lead to inheriting unresolved security issues or even ongoing breaches. As such, organizations should perform detailed cybersecurity audits and assessments during the due diligence process. This approach helps uncover and fix any existing vulnerabilities or breaches before they become a problem.

Integration challenges: Combining IT systems can be complex and may create security gaps. In particular, differences in security architectures, policies, and practices between the two organizations can lead to vulnerabilities. By developing a detailed integration plan that includes security protocols and standards, organizations can ensure a smooth and secure merging of IT systems, addressing potential security gaps proactively, instead of reactively.

Compliance issues: Each company involved in the merger may be subject to different regulatory requirements for data protection and privacy. And, what's more, ensuring the merged entity meets all legal standards can be challenging. Organizations should conduct a comprehensive compliance review to identify all regulatory requirements. They should also create a compliance roadmap to ensure the merged entity meets all necessary legal and regulatory standards.

Insider threats: The M&A process can create uncertainty and discontent among employees, increasing the risk of insider threats, such as intentional data leaks or sabotage. Because of this, organizations should implement robust insider threat monitoring and establish clear communication channels to address employee concerns. Reducing uncertainty can help mitigate the risk of insider threats.

Legacy systems: Supporting outdated or unsupported technology within the merged entity can pose significant security risks, as these systems are often more vulnerable to cyberattacks. To solve this problem, organizations should prioritize the assessment and modernization of legacy systems. Ensuring these systems are properly secured until they can be replaced or updated will significantly reduce vulnerabilities.

Resource allocation: Resources may be spread thin during an M&A, leading to neglected cybersecurity practices or delayed incident responses. Involvement of multiple third parties, such as consultants and advisers, can also increase the risk of data exposure. Organizations can get ahead of this issue by allocating dedicated resources for cybersecurity during the M&A process. They also need to ensure that third-party partners adhere to strict security standards and practices to maintain data security.