Effects of Cyber Threats on the Stock Market and What Can Be Done About It

The development of information technology has made it easier for corporations and individuals to communicate, cooperate, and even promote innovation. The increasing use of technology has created some loopholes that cybercriminals are taking advantage of. This has exposed corporates and individual users of technology to cyber threats.

What Are Cyber Threats?

These are malicious attempts by an attacker to cause interruptions to a network or computer system by accessing unauthorized data. This is a problem for many organizations that have embraced technology in their operations.

There are different types of cyber threats. They include:

  • Malware – This is a file or program developed by cybercriminals to destroy their target victim’s computer. An example of malware is the common computer viruses, worms, spyware, among others
  • Social Engineering – It comes as a form of human interaction where the victim is manipulated by the cybercriminal to disclose personal information. This information can later be used for fraudulent purposes by the cybercriminal
  • Phishing – Fraudulent emails or messages which appear to be legit are sent to the victim by the perpetrator of cybercrime. A positive response to such emails can lead to personal data loss, such as your online banking details
  • Ransomware – This may be similar to malware attacks, but with this one, the attacker locks their victim’s computer until their demands are met.

Cyber threats can be a challenge to individuals and corporates if action is not taken in advance.

How Do Cyber Threats Affect the Stock Market?

In most states in the US, disclosure of data breach is required by the law. The disclosure is likely to affect the stock market negatively. However, the impact of cyber threats to the stock value depends on the industry and nature of the threat.

Companies that offer blue chip stocks are less likely to suffer a big impact because their stock presents a low risk to the investors. Once a company trading its stocks experiences cyber threats, their reputation is damaged, in return, will negatively affect the company and its stock market. Nobody would buy stock from a company that reports frequent cyberattacks on its system. Therefore, an increase in the number of cyber threats to a company’s network will negatively impact the value of the company’s stock. This is a positive correlation.

Impact of Cyber Threats to Your Investments

Cyberattacks have never been beneficial to any form of investment, and no one is safe from the attacks. Once cyberattacks are successful in your business investment, they can lead to:

  1. Theft of your organization data and information. Attackers can steal sensitive data from your company, which gives your business a competitive advantage over others.
  2. Your investment is likely to suffer monitory loss. This is because you have to incur the costs of having the damaged computer network restored.
  3. You are likely to lose your money through fraudulent activities that the cybercriminal may do with the banking credentials they have retrieved from your system.
  4. When the cybercriminals have penetrated your network, it may be impossible for you to carry out transactions online.
  5. Cyber threats can negatively affect the reputation of your investment and lead to loss of customers and sales.

What Can Be Done About Cyber Threats?

A simple cyberattack can cause a lot of damages to your business investment. You don’t have to wait for the damages to occur for you to act. Take precaution measures and safeguard your investment from cyber threats. Here is what you should do.

  1. Back up your data – You should have a back plan for your business data and website. With such a plan, you can quickly restore any information that the cyber attacker may have stolen or damaged. Consider multiple back-up methods for the best of your investment. It is a good practice to regularly check whether the backed up data can be retrieved.
  2. Keep your devices and network secured – It is a good practice to keep your software updated and remember to use anti-virus on your devices. This will protect your devices from malware infections.
  3. Start encrypting your sensitive information – Keep your network encryption settings on; this will ensure your data is sent and stored in a coded form. It reduces the risk of anyone tampering with the data.
  4. Start using 2-step verification security settings for all online accounts.
  5. Manage your passwords – Use strong passwords and start changing them regularly.

Cyber threats can be a disaster in the stock market and your investment. You can reduce the impact of cyber threats by considering a combination of the measures discussed above.

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