Technology & Innovation

How CFOs can overcome hidden cyber risks of siloed financial data

Learn how outdated financial management tools can increase risk and discover the steps businesses should take to improve security.

With our reliance on technology and data, your role as the CFO has evolved to include more than just reporting and analysing the numbers for the business.

You and your finance team are now at the centre of a complicated threat landscape that includes a range of risks, from cybersecurity threats to supply chain disruptions.

One of your biggest risks is siloed financial data.

This is when you store financial data in separate systems or departments, leading to inaccurate financial reporting, inefficient processes, compliance risks and security risks.

In this article, we’ll explore the complex threat landscape you face and highlight the risks of siloed financial data.

Then we’ll give you tips and best practices for mitigating these risks, ensuring your financial data is accurate, secure, and accessible.

Here’s what we cover:

The problem: Siloed data and rising cybersecurity risks

Today, your business generates and stores vast amounts of data. But if you’re not securing it, you’re asking for problems.

Many businesses still rely on outdated data storage practices, using unconnected databases, hard drives, and obsolete software applications. In finance, it’s common to see teams working manually to export numbers into spreadsheets and send these files as email attachments.

Siloed data leads to a bigger threat of cyberattacks.

One of the biggest risks associated with siloed financial data is the increasing threat of cyberattacks.

Phishing, ransomware and malware are becoming more sophisticated, and businesses are struggling to keep up.

Each data transfer and hand-off introduces a new set of risks. Transferring data via email is a common practice. If cybercriminals intercept these emails, they can steal sensitive financial data and use it fraudulently.

Breaches can result in financial losses, reputational damage, and legal liabilities.

Data breaches are becoming increasingly costly, with the average cost per breach reaching new highs. The average cost of a breach rose 10% between 2020 and 2021, to $4.24m (£3.4m), the IBM/Ponemon Institute’s 2021 Cost of a Data Breach survey found.

As the costs of data breaches continue to rise, leadership teams know they need to do a better job securing sensitive financial data.

In Foundry’s 2023 Digital Business study, 40% of business and IT leaders cited improving security as a top strategic objective.

Why manual processes are the root of your problems

When it comes to financial data, many security and compliance issues stem from outdated, highly manual business processes.

With locally stored spreadsheets, people may send sensitive data to those who shouldn’t see it. Or they might post it on internal messaging platforms that don’t meet compliance rules.

Employees may also share information with vendors and contractors, taking it out of company control. Every new instance of data sharing opens the door to a potential breach.

Manual processes can make it difficult to track who has access to financial data and what they do with it.

“When information changes hands, you don’t know who’s accessing or changing it,” explains Scott Freedman, Director of Marketing for Sage Intacct.

Compliance risks are also a significant concern when it comes to manual processes.

Regulations such as GDPR require you to maintain accurate financial records and protect sensitive financial data.

Outdated, manual processes can make it difficult to comply with these regulations, leading to fines and legal penalties.

The solution: Cloud-native applications

It’s a given that your business should take steps to mitigate cybersecurity risks, such as automating processes, implementing access controls, and investing in cybersecurity measures.

However, as the CFO, you need to explore innovative solutions. One could be the adoption of cloud-native applications.

What is a cloud-native application?

A cloud-native application is a software application designed and built from the ground up to run in the cloud and optimised to use benefits such as scalability, elasticity, and cost-effectiveness.

Cloud-native applications are built using modern techniques and are easily scalable, resilient, and quickly adaptable to change.

This approach allows for more efficient resource use and better performance than traditional applications.

How can cloud-native applications de-silo your financial data?

If you consolidate financial information in a cloud-native application, you create a single centralised source of truth, providing useful seamless and accurate real-time data.

You can then use personalised dashboards to monitor your financial data and create accurate, customised reports you’ll be confident in trusting.

This will help you solve the challenges of siloed financial data and outdated, manual processes.

The benefits of granular access controls

One of the key benefits of cloud-native applications are the granular controls they offer for compliance and access.

You can set up access controls, ensuring only authorised individuals can access sensitive financial data.

You can also create detailed audit logs, making it easy to track who has accessed financial data and what they have done with it. You can then comply with necessary regulations much more easily.

You can give different levels of information to different stakeholders via personalised dashboards that display all the information they need to do their jobs, but nothing more.

By adopting cloud-native applications, you can improve your financial reporting processes, reduce the risk of breaches, and comply with regulations.

Choose the right cloud solution

Not all cloud-native applications provide the same level of safety. Because security is critical, it’s important to determine whether a solution meets your specific needs.

A cloud-native application offers stronger protections for financial data than an on-premises system, but not all cloud providers are alike. Before making the transition, take the time to document your needs and make sure your critical data will be in good hands.

Here are some critical questions you should ask when choosing a cloud solution:

Compliance

  • How does the cloud provider ensure data privacy and compliance with regulations such as GDPR SOX, SSAE 18, SOC 1 Type II, SOC 2 Type II, ISAE 3402 and 3000, PCI-DCC Level 1, HIPAA?

Data security

  • What is the cloud provider’s track record regarding security and compliance?
  • What security measures does the cloud provider have to protect sensitive financial data?
  • Does the solution support the ability to react quickly to actual or suspected unauthorised access?
  • Does the cloud provider review your data logs for signs of trouble?

Business continuity and disaster recovery

  • What is the cloud provider’s disaster recovery plan
  • How will they ensure business continuity during a data breach or outage?
  • What are the vendor’s procedures for securely backing up and restoring your data in an emergency?
  • How does their solution prevent data loss and maintain data integrity during the transfer?

Access controls

  • Does the cloud provider offer granular access controls, making managing who has access to financial data easy?

Data loss prevention

  • Does the solution have the technology to identify and prevent data loss in email, collaboration tools, and other internal systems?

Encryption

  • How does the cloud provider ensure data encryption in transit and at rest?

Authentication

  • Does the cloud provider offer multi-factor authentication, ensuring only authorised individuals can access financial data?

Network security

  • Does the solution have up-to-date firewalls and antivirus software?
  • Does it remove unnecessary features that could be portals to future hacks?

Monitoring and penetration testing

  • Does the provider monitor and review its servers and user activity?
  • Does it conduct regular tests on data, applications, systems, and infrastructure?

Final thoughts on de-siloing and securing your financial data

If you’re looking for productivity and efficiency gains, it’s time to stop using manual processes to work with your financial data.

Instead, de-silo with modern technology. Remember, cloud-native applications:

  • Provide a centralised platform for consolidating financial information, reducing the risk of inaccurate financial reporting and inefficient processes.
  • Offer granular controls for compliance and access, making it easy to comply with regulations and reduce the risk of breaches.
  • Can be used to create personalised dashboards, enhancing productivity and efficiency.

However, choosing the right cloud provider that meets your security and compliance requirements is essential.

Invest time in understanding your business needs and evaluate different cloud providers before making the big transition.

Managing modern finance in a time of unprecedented change

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