16Dec

It’s Time To Think About Recession-Proofing Your Cybersecurity

Let’s talk recession. A recession is a period of economic downturn during which businesses typically experience decreased sales and revenue, and employment levels often fall. A recession is typically characterized by reduced consumer spending, increased competition, and difficulty obtaining financing. Recessions are generally considered to be a prolonged and severe decline in economic activity, as compared to a typical downturn or slowdown. While the causes are many, the general response for most organizations is the tightening of monetary policy due to rising inflation and other global economic concerns. The Feds just hiked the key interest rate again as it continues to try to curb inflation, making it more difficult for your company to obtain financing and threatening to put your investments and expansions on pause.

 

Jaw-dropping and sustained supply chain disruptions have substantially contributed to inflation over the last several years. While supply chain issues are typical in economic downturns, the vastness and intensity this time were spurred on by the pandemic and related lockdown policies. Then in the midst of the recovery, gas and oil supply worsened due to Russia’s attack on Ukraine.

 

So, supply chain issues exacerbated inflation if it didn’t outright cause it. No matter the ultimate causes, your company may be faced with greater challenges and struggle to access the raw materials, components, or other goods you need.

 

Common Recession-Related Effects Businesses Experience

 

1. Decreased demand for the company’s products or services. During a recession, consumers are often hesitant to spend money, which can lead to lower sales and revenue for the business.

2. Increased competition as the market contracts.  As businesses struggle to survive during a recession, they may be more willing to offer discounts and promotions in order to attract customers. This can lead to increased competition and lower prices for the company’s products.

3. Rising costs.  And if you are in the manufacturing business you may experience increased costs of raw materials, which in turn reduces profits. Your company may be forced to raise prices which may reduce sales and revenues. Labor costs and many other expenses often increase during a recession.

4. Diminished ability to invest  in new equipment, technology, or other growth opportunities.

5. Disruptions in supply chain. A recession can lead to disruptions in the supply chain as businesses may struggle to access the raw materials, components, or other goods they need to produce their products. This can lead to delays, increased costs, or other challenges for the company.

6. Difficulty obtaining financing.  During a recession, lending institutions may be less likely to provide loans or other forms of financing to businesses. This can make it difficult for companies to invest in new equipment, expand operations, or cover other expenses.

In short, a recession puts a lot of pressure on the company’s financial operation and planning.

 

How To Safeguard Your Cybersecurity Program in a Recession

 

Recessions can dramatically affect your cybersecurity program and leave your business, systems, and data more vulnerable. Expect to be asked to do more with less at least for the short term, as most recessions only last around one year.

 

So how do you prepare your cybersecurity for a recession? There are several steps you can take to not have your cybersecurity budget gutted:

 

1. Identify any cost-saving measures such as server consolidation and virtualization to reduce the amount of licensed software and hardware needed in addition to operating staff. Look close and hard at systems that you could decommission sooner to save on license, hardware, and energy costs. What are more cost-effective and efficient technology infrastructure to minimize the need for frequent upgrades and replacements.
2. Look at options for reducing operating costs such as by finding cloud-based solutions to reduce the need for expensive hardware and on-premises infrastructure. Cloud pay-as-you-go technology solutions to reduce upfront costs and avoid over-provisioning issues that tie up capital.
3. Automate processes to reduce the need for manual labor, which can be affected by rising wages.
4. Consider training and development programs to help IT staff stay up to date with the latest technologies and methods, which can help the company maintain its competitive edge. It may also allow you to get more out of existing technologies.
5. Ask your vendors about longer-term contracts to lock in prices that protect you against future inflation, by locking in prices and avoiding future price increases. It also saves you from having to go back to the money purse in 12-months and ask for the funds again. Have the vendor help you put together the business case that you need to present to your CFO.
6. Pursue strategic partnerships and collaborations with other companies to share resources and expertise, which can help reduce costs and increase efficiency. This is a great time to find non-competing companies to share and leverage resources and knowledge, setup mutually beneficial partnering agreements for example.

 

This is a time when you want to be diligent about data as well. Track and calculate the cost cutting measures you are taking in dollars and cents. Use data analytics and business intelligence tools to monitor effects and to help you make informed decisions about further steps.

 

Then the Key Is To Manage, Manage, Manage

 

1. Monitor the economy and inflation rates closely and adjust the company’s strategies accordingly. This might involve regularly reviewing the company’s budget and making changes to stay on track.
2. Regularly review your forecasted budgets and current prices to make sure you are keeping up with the rising cost of goods and services. Adjust if that solution now exceeds the budget you put in 9 months ago.
3. Continue to track and control costs and find new ways to reduce expenses and increase efficiency.

 

The key to maintaining a strong cybersecurity posture in the face of inflation or a recession is to stay proactive and adaptable. By taking a smart, forward-thinking approach to mitigating impact of a recession or downturn, your business and technology are much better poised to stay protected and secure.

 

Want to talk about your cybersecurity? Schedule a meeting now.

 

Stig Ravdal is the President & Founder of Ravdal, Inc., a leading cybersecurity strategy and solutions company. He is widely considered an expert in the field and is available for speaking engagements.

 

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