Security budget cuts may escalate cyber risk, warns Fitch

Fitch Ratings has warned of a potential increase in cyber risk as corporate and infrastructure cybersecurity budgets across the US come under increasing pressure due to poor revenue outlooks.

Analysts note that cybersecurity spending is often viewed as an added cost rather than an essential business expense, with ROI metrics difficult to quantify, unlike other types of spending and investment.

With economic uncertainty, rapid interest rate hikes to combat inflation, and the negative effects of a strong US dollar on large multinational companies, cybersecurity investment may therefore be significantly reduced, Fitch says.

This will likely increase the downside risk of attacks, although large companies, critical infrastructure and regulated industries should fare better than small-to-medium companies in unregulated industries and lower margin sectors, the rating agency said.

However, a large cyber budget does not necessarily translate to better cybersecurity, nor is it an effective risk metric, as it is difficult to distinguish if budgets are appropriately funded.

Substantial budgets can be indicative of a larger attack surface, an inefficient use of resources or higher reliance…