Investment in cybersecurity often overlooked by CEOs, PwC chief warns

This article first appeared in The Edge Malaysia Weekly, on May 31, 2021 - June 06, 2021.
Soo Hoo: Top of mind for most CEOs surveyed is not so much what needs to be done but more of a question of timing — when do I invest? But we should not miss the forest for the trees — short-term interventions need to be balanced by long-term sustainable solutions.

Soo Hoo: Top of mind for most CEOs surveyed is not so much what needs to be done but more of a question of timing — when do I invest? But we should not miss the forest for the trees — short-term interventions need to be balanced by long-term sustainable solutions.

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WHILE digitalisation is the name of the game today, an often overlooked strategy in the digital playbook is investment in cybersecurity, observes PwC Malaysia managing partner Soo Hoo Khoon Yean.

Citing statistics from PwC’s recent 24th Global CEO Survey, he says nearly half of the CEOs globally — and 56% of CEOs in Malaysia — plan to increase their investment in digital transformation by 10%.

Dive deeper into the data, though, and one would see that investment in cybersecurity — a rising threat, owing to the growth of digitalisation — is often overlooked. Only 38% of CEOs in Malaysia plan to increase their investment in cybersecurity by 10%, Soo Hoo tells The Edge.

“So, that is 56% against 38% — people are focusing more on investing in digital transformation, while cybersecurity is an afterthought. This is a telling insight and a pressing concern.

“Digital transformation is often attractive to people, while cybersecurity is seen as an additional cost … But when you fall victim to a breach, you’ll find that it can cost you quite substantially,” he warns, citing the IBM and Ponemon Institute 2020 Cost of a Data Breach Report, which notes that the global average cost of a data breach is US$3.86 million.

Global cybersecurity company Kaspersky had noted in a webinar recently that the Asia-Pacific region remained one of the top targets for Ransomware 2.0 attacks globally in 2020, with increasing Ransomware Evil (REvil) and JSWorm attacks. It was also reported that Malaysia was in the top 10 in terms of REvil and JSWorm attacks in Asia-Pacific.

Interestingly, while a lower percentage of CEOs in Malaysia plan to increase their investment in cybersecurity, cyberthreats tied in third place with uncertain economic growth as their areas of concern (58%), according to the 24th Global CEO Survey in January to February this year, which asked 5,050 CEOs around the world — including 48 Malaysian respondents from government-linked companies, public listed companies and private businesses — how they were reinventing their companies to mitigate global disruptions.

“The level of cyberattacks has gone up exponentially in the last 24 months. Cybersecurity is a real issue … And this involves not just hacking but data privacy as well. This is akin to medical treatment: If you’re not sick, you’re not looking to spend. This is because nobody wants to take medicine pre-emptively … But when you get sick, it’s a big problem. That is how I see cybersecurity management,” Soo Hoo explains.

He observes that the other missing link when it comes to digital transformation is the lack of investment in talent. “The thing that makes the biggest impact in terms of digital transformation is your people. You can invest in the best-in-class when it comes to technology, but if your people are not ready in terms of mindset and are not making the best of it (the technology), your digital transformation would only be partially successful at best.

“This is something some people could be blindsided by. They see technology transformation as ‘I’m going to invest in best-in-class technology’. But what about the people who know how to use it? How do you maximise that?

“Speaking to corporates that have gone through the journey, the resources and investment in upskilling their people may even outstrip the technology cost … because it takes more time and effort before you can see the benefits.”

The other challenge in the digital transformation of firms is the digital divide, Soo Hoo notes.

“If you have an organisation that spans generations, you would find that those who are more senior in position are the older ones. The younger ones are more innovative and likely to be adaptable to tech usage [but] they don’t have the business acumen and experience to maximise the use of technology. The senior ones have this advantage, but they may not be so adaptable in employing technology. This extends to the wider society as well. How do you bridge the great digital divide? To me, that is the critical success factor.”

Recognising that PwC’s own business model is being disrupted by digitalisation, Soo Hoo says while he cannot disclose specifics, the group has invested a “significant amount of its revenue” in digital transformation that will be channelled into technology, people and cybersecurity.

“We remain focused on delivering core professional services but we do believe that, to be competitive, we need to consider how to use digital assets to complement our bread-and-butter service offerings for a human-led but tech-enabled experience,” he says.

“We have started that journey. For example, we do a lot of finance and accounting work. We are looking to package robotic process automation solutions to complement our core services. As a professional services firm, we typically share a set of recommendations with our clients on what needs to be done. Today, however, we not only sell recommendations but also provide products that our clients can ‘plug and play’ so that they too can implement the recommendations. Globally, we are taking it a step further and have things like citizen-led digital labs for our people to come up with new solutions to improve their work internally and with clients.”

Asked how much PwC Malaysia aims to grow the contribution of its digital services to the group, Soo Hoo says it “must be a material contribution”.

He believes that when it comes to digital transformation, corporations should invest “equal resources” in technology, people and cybersecurity.

Based on PwC’s 24th Global CEO Survey results, Soo Hoo says Malaysian CEOs, like those globally, are still riding out the aftershocks of the pandemic but more of them have begun to show increased optimism for a recovery and their ability to reposition themselves for the future as vaccination programmes are rolled out worldwide.

“Top of mind for most CEOs surveyed is not so much what needs to be done but more of a question of timing — when do I invest?” Soo Hoo observes. “But we should not miss the forest for the trees — short-term interventions need to be balanced by long-term sustainable solutions.”

Soo Hoo points out that, while digital transformation and upskilling are top of mind, the focus on climate change and sustainability remains a priority.

“People tend to be reactive rather than proactive. As a country, there is a lot that can be done to make sure that we stay on a par with developments globally. This is important. Look at institutional investors globally — people are starting to look at ESG (environmental, social and governance) as an important element when they consider investments, and Covid-19 has accelerated the thinking behind this.”

The survey data shows that climate change was selected as a threat by 30% of CEOs globally. Only 40% of CEOs globally factored climate change in their strategic risk management activities.

At home, the trend is similar: 35% of CEOs see climate change as a threat and 38% are tackling it as part of their risk management approach. Only 29% say they are looking to significantly increase long-term investment in this area in the next three years.

 

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