Cybersecurity is important for most industries, but it is essential for those in the accounting and financial management fields. Nobody questions how the internet and advanced software programs have improved efficiency and accuracy in these industries, but technological advances have also caused them to become prime targets for cybercrime. The number of security threats continues to grow each day, making it difficult to protect your firm from data breaches.
These attacks are ubiquitous. For instance, in 2021, major companies such as Sequoia and Capital One suffered severe data breaches that damaged their financial health and reputation. All of these cyberattacks are expensive. In the US, a single data breach costs $500,000 on average, with many companies losing millions. To make matters worse, the number of data breaches rose significantly in 2021 compared to 2020. These numbers are staggering and illustrate why all financial industries, including accounting, must make financial data security a constant priority.
The Rise of Accounting Cybersecurity Attacks
You cannot afford to downplay the number of cyber security threats to your industry. They are pervasive and unrelenting. For example, the number of these attacks rose from 1,108 in 2020 to 1,291 in 2021, and things are not improving in 2022. In fact, cybercriminals are creating more sophisticated hacks and unleashing them on companies of all types, particularly those dealing in finance. Just recently, Goldman Sachs economists reported that the US infrastructure for financial services is especially vulnerable to Russian cyber-attacks — a potentially dire situation that could cost the industry, along with the transport and energy sectors, billions of dollars.
The danger to accounting firms is clear. In the last two years, you have seen an alarming 300% increase in cyberattacks. According to PwC, accounting and financing firms have a 30% higher risk of suffering a cyber-attack than other companies, making the situation dire.
Clearly, the news is not good. Accounting firms are a vulnerable target and desperately need to embrace cybersecurity best practices. If your firm has not prioritized cybersecurity, it must do so now. One attack could cripple your company or put it out of business.
Why Is Accounting Cybersecurity Important?
In accounting, cybersecurity is becoming ever-increasingly important. Accounting firms manage and store valuable financial data and sensitive business information. Therefore, you must take special precautions to protect yourself. The following points emphasize the importance of being proactive with your financial data security:
- Cyber attacks are increasing: The increase in cyber attacks continues to grow annually. By 2023, analysts predict that 33 billion records will have been stolen - a 175% increase from 2018.
- Hacking requires very little training and is easily done: Despite what you may believe, many hackers are not cyber geniuses. Simple methods such as phishing via email can be successful with little technical knowledge.
- Breaches in security put your organization’s and your client’s data at risk: Of course, a security breach can result in serious financial harm to your firm, but it can also lead to a client’s data being stolen. Such a breach harms your reputation and leaves you open to legal action by the affected clients.
- Cyber attacks could permanently damage your reputation: Once your data is hacked, your clients will rightfully be wary of continuing your business relationship. You may eventually recover your reputation, but it may take years. Consider Equifax — many clients were affected by their huge 2017 breach and have not forgotten.
Your clients trust you to keep accurate financial records for them. A financial data breach may lead to the theft of sensitive information. Or, the hacker may make changes in the client’s file that can lead to issues with tax filing, stockholder reports, and other vital services. If your firm loses your clients’ trust, you have lost everything.
Why Cybersecurity in Accounting is Critical: The Potential Impact of Being Hacked
Your excellence as an accounting company is no defense against a cyberattack. You can be the top firm in your field and still be the victim of a devastating hack. Instead of sympathy for suffering such a crime, you will likely experience some severe consequences.
- Financial Loss: As stated before, a single hack can easily cost you $500,000. That figure does not include the long-term financial effects or the price of increased security measures.
- Loss of Clients: If clients do not feel that their financial information is safe, they will leave your company and go to a competitor. In fact, 60% of small businesses close within six months of a data breach, in part due to the loss of their clients.
- Damaged Reputation: Your reputation is the soul of your business. If you are the victim of a cybercrime, your company’s brand takes a hit. Consumers may feel sorry for you, but they will also lose trust in your ability to serve their needs. A damaged reputation may be a financial data breach's most long-term severe cost.
- Reduced Employee Morale: A data breach is hard on you and your employees. You may feel that you have let your clients down. Also, worrying about future breaches and attempts to assign blame can harm your workplace culture.
No company comes through a data breach unscathed. That is why accounting cybersecurity is so critical.
Financial Data Cybersecurity Threats
The list of cybersecurity threats is long, but many of these hacking strategies have been around for years. Some have become more sophisticated, but others work because computer users become complacent and inattentive. Some of the most common threats are:
- Phishing: Phishing remains one of the most common and successful ways for cyber thieves to steal financial data. You will receive an official-looking email notice that one of your accounts has been threatened and that you must provide account information to fix the issue. The provided web link does not connect you with your bank, credit card provider, or other legitimate business' websites. Instead, you are taken to the hacker's website, where your personal information will be used to access your accounts.
- Malware: Malware comes in the form of malicious code or software and is inserted into your network via a download, thumb drive, etc. Before you know there is a problem, this “secret” virus can corrupt your operating system, applications, and data. It is easily passed from computer to computer in your office and is one of the biggest network security threats.
- Ransomware: Ransomware is one of the costliest cyberattacks. When your network is infected with ransomware, you will not be able to access your system until you pay a ransom using online payment, often virtual currency such as bitcoin. Cybercriminals stay in possession of an encryption key until you meet their demands. Of course, paying the ransom is risky as you have no guarantee that your system will be released. Releasing your system from ransomware can be nearly impossible.
- Spam: Spam emails appear to be advertisements for legitimate products and services. When you click on a link or download an attachment, however, you may be downloading a virus that can freeze your system or steal your data.
How to Protect Financial Data from Cybersecurity Threats
The best protection against these cybersecurity threats is often improvements to user behavior coupled with advanced security software protection. Some of the best strategies to improve accounting cybersecurity include the following:
1. Understand Your Threats
You and your staff need to understand what internal and external threats exist. In addition to viruses, hacking, and ransomware, you have to realize that accidental data sharing among staff and other lax procedures can endanger the security of your financial data as well.
2. Provide Ongoing Cybersecurity Training
You cannot mention cybersecurity practices to your staff once a year and be done with it. You need to establish regular training sessions to inform your staff of new threats and review best cybersecurity practices. Training needs to be an ongoing practice.
3. Utilize a Password Manager
Secure passwords need to be long and somewhat complex. However, employees find secure passwords difficult to remember, particularly when using multiple passwords daily. A secure password manager program allows you and your staff to create, manage, and store strong passwords conveniently and safely. Your data will remain safe, and you will save time and eliminate frustration.
4. Require Complex Passwords and Multi-Factor Authentication
You should institute a complex password policy requiring longer passwords, including numbers, letters, and symbols. In addition, requiring multi-factor authentication adds an effective layer of additional security. That means that account access will need a password as well as inputting a code sent to the user's phone or email account. At least two methods of ID verification should be involved.
5. Backup Your Cloud Accounting Data
Using the cloud is not enough. You need to backup your cloud accounting data several times a month in case your account is hacked so that vital information is not lost. You can easily find an excellent software program to automatically backup your cloud accounts and guarantee you will not lose data.
6. Perform Audits and Penetration Testing
Realize that you need outside help to keep your technology safe. You should use a third party to audit your software and hardware in order to identify weaknesses. Part of your regular routine should be penetration testing, where an expert attempts to hack into your system so you can identify and fix any problems.
7. Use Encryption Always
Many accounting firms use email encryption when sending data to another party. To be truly secure, you should always use encryption for stored data, data on devices, and data at rest. In short, leave no data unprotected.
8. Enhanced Network Security
Your accounting business network needs to include the latest safety features, including next-generation firewalls that can quickly detect intruders, allowing you to stop breaches before you suffer a loss of data.
9. Control System Access
A big part of accounting cybersecurity is to control access to systems and data so that only those employees that need the information to do their jobs can access it. You will need to create access guidelines arranged by group or job title so that an employee’s leaving their position will not confuse the issue.
10. Ensure Regular Updates
Manufacturers routinely update software and hardware to correct weaknesses that hackers can exploit. Be sure that your programs and hardware are updated automatically so that you are not vulnerable to cybercriminals.
How to Protect Your Accounting Operations With Multiview Software
Another key to enhanced accounting cybersecurity is using the right software security program. Multiview software will more than meet your accounting firm’s needs. Multiview Financial Software relies on the exceptionally flexible and secure cloud infrastructure of Amazon Web Services (AWS). Each customer is isolated to their own Virtual Private Cloud (VPC), which offers 100% data isolation from other customer data, meaning your company's data protection is ensured.
As part of its multi-pronged security strategy, Multiview uses third-party security consultants to conduct vulnerability assessments. In that way, we find and correct vulnerabilities that a malicious hacker could potentially exploit. Accounting and other financial firms are prime targets for cybercrime, which requires a sophisticated and proactive approach to cybersecurity. You cannot rely on non-industry-specific software to do the job.