An online retailer’s chief executive learns hackers have stolen millions of customer records. His first action is to call the lawyers. His second to contact the insurers. His third is to draft his resignation. Data breaches end careers, but the real damage lies elsewhere. Millions of people trusted that company with their addresses, bank details, and medical histories. Now that information is circulating in places they will never know.
The share price drop and regulatory fine matter, but they are not the point.
A data breach is an ethical failure first. Boards that miss this will keep fighting the wrong battle.
You made a promise
Every organisation that collects personal data makes an implicit promise. When customers share personal details, or patients let hospitals store their medical records, or employees hand over bank details for payroll, each trusts you to protect that information. This is not a commercial transaction you can weigh against other priorities. It is a moral obligation.
The ethical case for cybersecurity comes before the business case. You do not protect data because regulators demand it or because breaches cost money, though both are true. You protect it because you accepted responsibility for information that belongs to other people.
Treating security as a compliance exercise misses the point. Compliance asks “What must we do to avoid punishment?” Ethics asks “What do we owe to those who trusted us?”
Companies that build privacy and security into their culture make better decisions. They think harder about what data they actually need. They delete information they no longer require. They design systems with protection built in from the start, not bolted on later.
The law has caught up
Regulators now treat data protection as a board-level concern.
In Britain, the Information Commissioner’s Office can fine organisations up to £17.5 million or four per cent of global turnover for serious breaches (ICO Penalties Guidance). In the United States, the Securities and Exchange Commission requires public companies to disclose material cybersecurity incidents within four business days (SEC Cybersecurity Disclosure Rules). Directors who cannot show adequate oversight risk personal liability.
The financial damage goes beyond fines. Research by Comparitech found that share prices fall 7.27 per cent on average after a breach (Comparitech Data Breach Study). Customers leave. Partners get nervous. Good people avoid joining companies known for carelessness.
Security competes for money
If the case for cybersecurity is so strong, why do so many organisations underinvest?
Security spending generates no revenue. When it works, nothing happens. A finance director can point to a new factory and forecast returns. A security leader can only point to disasters that did not occur. In the fight for capital, prevention loses to expansion.
The threat also keeps changing. Today’s defences may fail against tomorrow’s attacks. Boards face endless investment with no finish line.
The temptation is to do the minimum, tick compliance boxes, buy insurance, hope for the best. This confuses activity with protection. Organisations that focus only on compliance can follow all the rules and still suffer devastating breaches.
The honest conversation accepts that perfect security costs too much and cannot be achieved anyway. Boards must decide how much risk is acceptable given the business and the data involved. This is a strategic question, not a technical one. It belongs in the boardroom.
Accepting risk honestly
Every organisation accepts some cyber risk. Eliminating all digital systems is neither practical nor sensible. But how you accept risk matters.
Some risks are taken knowingly, after careful analysis, with mitigations in place. Others are accepted through ignorance, inattention, or wishful thinking. These are not the same.
A board that understands its vulnerabilities, weighs remediation costs against breach probability and impact, and makes a considered decision has done its duty – even if the worst happens later.
A board that never asks the questions, or asks them only to get reassuring answers from executives with every reason to minimise problems, has failed before any breach occurs. The ethical lapse is not accepting risk. It is accepting risk without understanding it.
When you collect data, you implicitly promise to protect it. Knowingly running inadequate defences while continuing to gather sensitive information is deception. You are making a promise you have no intention of keeping.
What good looks like
Effective cyber governance does not require every director to become a security expert. It requires boards to ask the right questions and create structures that produce honest answers.
Put cybersecurity on the board agenda regularly, not just after incidents. Give board members direct access to security leadership, not information filtered through managers protecting their careers. Commission external assessments that report directly to the board.
Most importantly, build a culture where bad news travels fast. The most dangerous organisations are those where people fear reporting vulnerabilities more than the vulnerabilities themselves.
This is a leadership question
The shift from treating cyber risk as a technical problem to recognising it as a governance issue is already happening. Regulators demand it. Investors expect it. Customers increasingly choose organisations that demonstrate genuine commitment to protecting their information.
Boards that engage seriously with these challenges gain more than risk reduction. Organisations known for strong security attract better partners, win more sensitive contracts, and build deeper customer loyalty. When data is currency, trustworthiness is a competitive advantage.
Security belongs in the boardroom. Is your board ready to own it?
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