The Financial Risks of Poor Cybersecurity

What Could You Lose with Poor Cybersecurity?

In today's hyperconnected landscape, cybersecurity isn't just a tech department concern—it's a bottom-line issue. From ransomware payments and regulatory fines to downtime and reputational damage, the financial costs of poor cybersecurity are staggering. For CFOs, especially those in highly regulated industries like gaming, financial services, insurance, and manufacturing, understanding these risks isn't optional. It's a strategic imperative.

Cyber Incidents: A Direct Hit to the Bottom Line

Let's begin with the raw numbers. In 2025, the average cost of a data breach is expected to exceed $5 million. This figure includes direct financial losses such as fraud, ransom payments, and incident response costs. But that's just the beginning.

Companies also face hidden costs that accumulate over time:

• Operational Downtime: On average, an hour of downtime costs mid-size companies $560,000.
• Customer Attrition: Breaches can erode trust, causing loyal customers to walk away.
• Increased Insurance Premiums: Cyber insurance carriers are tightening claim criteria and increasing rates for companies that lack documented defenses.

A breach doesn't just drain IT budgets. It affects revenue, operational efficiency, and shareholder confidence—three pillars that every CFO is responsible for safeguarding.

Beyond these costs, there are long-term reputational risks that lead to decreased market share and diminished investor confidence. A single breach can cause ripple effects across an organization's entire financial ecosystem.

The High Cost of Non-Compliance

For Nevada-based companies, especially those in the casino and financial sectors, failure to meet cybersecurity compliance mandates from the Nevada Gaming Control Board, GLBA, PCI, and HIPAA can result in revoked licenses, denied insurance claims, and class-action lawsuits.

In some cases, organizations are required to demonstrate their cybersecurity maturity before bidding on government contracts or expanding into regulated markets. The lack of proper compliance and documentation can exclude businesses from lucrative opportunities.

The Nevada CFO's Perspective

Nevada businesses operate in one of the most scrutinized digital environments in the country. The gaming and hospitality sectors process millions of sensitive transactions each day. In this environment, a single compromised endpoint or third-party vendor can shut down operations across entire properties.

According to the Federal Reserve, a cyberattack on a major financial institution could cascade into liquidity crises, triggering broader financial instability. This is especially relevant in Nevada, where large casinos often double as financial institutions, offering credit, rewards, and digital payments to thousands of guests.

Key considerations for Nevada CFOs:

• Do you have a redundant payment infrastructure in place?
• Are you conducting regular cyber risk assessments?
• Can you produce evidence of compliance and readiness to regulators and insurers?
• Are your vendors and third parties compliant with Nevada Gaming Board cybersecurity rules?
  

Third-Party Vendors: A Hidden Threat

Your cybersecurity is only as strong as your weakest vendor. Many breaches stem from trusted third-party providers, including payment processors, marketing platforms, and IT contractors.

Failing to vet and monitor these vendors increases your exposure exponentially. Worse, regulators are beginning to hold companies accountable for vendor-related breaches. That means even if the fault lies outside your organization, the financial consequences land on your desk.

CFOs must work with their cybersecurity and compliance teams to ensure:

• Vendor contracts include cybersecurity requirements
• All third parties undergo annual risk assessments
• You have contingency plans for vendor system failures
• Third-party breach scenarios are included in incident response drills

A proactive vendor risk management program not only prevents cyberattacks but also reduces liability in the event of a breach.

Reputational Damage: The Cost of Lost Trust

A compromised business loses more than data—it loses credibility. Customers, investors, and stakeholders judge your brand not only by how secure you are, but how quickly and transparently you respond to incidents.

Post-breach expenses often include:

• Customer compensation (e.g., identity monitoring services)
• PR crisis management
• Regaining lost business through marketing and outreach
• Stock price decline and lowered investor confidence

This is especially true for service-driven sectors like casinos, CPAs, and financial institutions. Trust is currency. Once it's gone, it can take years and millions of dollars to earn back.

Customer churn due to security breaches is a measurable risk. Studies show that nearly 60% of small businesses close within six months of a major data breach. Even larger organizations face an uphill battle restoring consumer faith.

Cyber Insurance Doesn't Guarantee Coverage

Many CFOs believe cyber insurance is the ultimate safety net. Unfortunately, 44% of cyber insurance claims are denied due to insufficient evidence of proactive cybersecurity measures.

To avoid denial, your organization must demonstrate:

• Documented cybersecurity policies

• Employee cybersecurity training

• Regular risk assessments and vulnerability testing

• A clear incident response plan

• Vendor compliance protocols

Insurers are becoming more selective and may require businesses to pass a cybersecurity audit before issuing or renewing policies. Lack of preparedness can result in higher premiums or denial of coverage altogether.

Orbis Solutions helps clients prepare detailed, audit-ready evidence that satisfies insurers and regulators alike—reducing the risk of claim denials and regulatory penalties.

Proactive Cybersecurity: The Better Investment

Spending on cybersecurity can feel like a sunk cost—until it saves your business. Consider the difference between proactive investment and reactive recovery:

In addition to monetary savings, proactive cybersecurity improves operational stability, customer satisfaction, and business resilience. It also supports faster response and recovery times, minimizing the potential scope of damage.

CFOs Must Lead Cyber Risk Strategy

Cybersecurity is no longer a function to delegate. Today's CFOs are expected to lead and invest in enterprise risk management. This includes:

• Participating in cybersecurity audits
• Aligning cybersecurity goals with financial KPIs
• Budgeting for compliance and technology upgrades
• Understanding the ROI of risk mitigation tools
• Championing a security-first culture from the top down

Collaboration between finance and IT departments can lead to smarter investments, fewer surprises during audits, and better outcomes during cyber incidents.

Actionable Cyber Security Tips for CFOs

Conduct a Cyber Risk Gap Analysis
Identify critical vulnerabilities in your infrastructure and prioritize remediation efforts based on potential business impact.

Integrate Cyber Metrics into Financial Dashboards

Track KPIs such as incident response time, employee training completion rates, and compliance audit results to align security efforts with financial goals.

Establish a Cybersecurity Budget Line Item

Allocate dedicated funds annually for cybersecurity upgrades, employee training, risk assessments, and threat monitoring.

Champion Executive-Level Buy-In

Lead by example. Present cybersecurity risks to the board regularly and ensure risk reduction is part of the company's strategic roadmap.

Develop a Business Continuity and Disaster Recovery Plan

Ensure that financial systems and critical operations can be restored quickly and effectively after a cyber event.

Request a Third-Party Cybersecurity Audit

Bring in external experts to assess your current risk posture and identify blind spots internal teams may overlook.

Collaborate Cross-Functionally

Work alongside HR, legal, compliance, and IT to build comprehensive, company-wide incident response plans.

Simulate a Breach

Run tabletop exercises with executives and finance teams to test real-time response scenarios and identify gaps before a real incident occurs.

Review Cyber Insurance Coverage

Ensure your policy is tailored to your industry risks and that all compliance and documentation requirements are being met proactively.

Maintain a Cybersecurity Readiness Binder

Keep an up-to-date repository of all security policies, vendor contracts, audit logs, and employee training documentation for use in audits, claims, or breach responses.