In the fast-paced world of mergers and acquisitions (M&A), the emphasis is often placed on financial metrics, market potential, and operational synergies.
However, recent cyber incidents, particularly in the healthcare sector, have made it clear that understanding the security posture of a target company is just as crucial to a successful acquisition.
With reports revealing a staggering 300% year-over-year increase in ransomware attacks on healthcare organizations, the risks associated with cybersecurity can no longer be ignored.
The Rising Threat of Ransomware
Microsoft’s latest report paints a concerning picture of the healthcare landscape.
As cybercriminals increasingly target this sector, organizations are now facing average ransom payments of $4.4 million. Additionally, the downtime resulting from these attacks can cost facilities up to $900,000 per incident. These figures not only reflect financial burdens but also highlight the urgent need for comprehensive cybersecurity strategies.
More alarmingly, the impact of these cyber threats extends beyond financial metrics.
The report indicates that incidents of ransomware attacks have led to a 15% increase in patient volume, a nearly 50% increase in waiting room times, and critical health complications, including a 113% increase in confirmed strokes and an 81% increase in cardiac arrest cases.
These statistics underscore the gravity of the situation—cybersecurity vulnerabilities can literally threaten lives.
Understanding the Value of Security Posture Before Acquisition
The pressing need to evaluate a target company’s security posture cannot be overstated.
In the healthcare sector, where cyberattacks can lead to life-threatening situations, ensuring the resilience of a company’s cybersecurity infrastructure is a critical part of any acquisition.
Identifying Financial Risks
When assessing a potential acquisition, it’s essential to evaluate its cybersecurity resilience.
The average ransom payment of $4.4 million is only one aspect of the financial risk. The costs associated with operational downtime, recovery efforts, and potential regulatory fines can quickly accumulate. According to a report by IBM Security, data breaches can lead to substantial losses, averaging $4.24 million per incident across various industries.
A thorough assessment of a target’s security posture helps identify potential vulnerabilities that could result in costly breaches down the line.
Protecting Patient Safety and Care Quality
In the healthcare sector, the stakes are significantly higher.
Compromised systems can lead to operational disruptions that negatively impact patient care.
The increases in critical health conditions following ransomware attacks serve as a stark reminder of the potential consequences.
Enhancing Operational Efficiency
Understanding a target’s security posture is vital for facilitating a smoother integration process post-acquisition.
A weak cybersecurity framework can complicate the merging of systems and processes, leading to delays and inefficiencies. For instance, if an acquired company has outdated technology or lax security protocols, the acquiring organization may need to allocate additional resources to rectify these issues, hindering the expected benefits of the merger.
As noted by cybersecurity experts, addressing these challenges upfront can save significant time and resources.
Reputation Management
In today’s digital world, reputation is everything.
A data breach can severely damage an organization’s reputation, leading to loss of trust among customers, partners, and stakeholders. The Change Healthcare breach is a case in point, as it raised questions about the reliability of the organizations involved to the level of the CEO testifying before Congress, and affected millions of patients with the theft of personal data.
Understanding a target’s security posture helps mitigate potential reputational risks, allowing acquirers to make informed decisions and avoid damaging public relations fallout.
Legal and Compliance Considerations
Cybersecurity assessments are also critical for navigating the legal landscape in M&A.
Acquiring a company with a history of breaches can expose the parent organization to legal liabilities and compliance issues, particularly in heavily regulated sectors like healthcare and finance. Non-compliance with regulations such as HIPAA can lead to hefty fines and penalties.
By assessing the security posture of a target company, organizations can better prepare for any compliance-related challenges that may arise.
SixMap’s Role in Cybersecurity Due Diligence
Understanding the security posture of a company being acquired is essential for minimizing risks and ensuring the success of the merger. With ransomware attacks on the rise and the stakes higher than ever, organizations must prioritize cybersecurity evaluations during the M&A process to protect their investments and ensure smooth integrations.
This is where SixMap delivers significant value. Unlike traditional vulnerability assessments that often require internal system access, SixMap offers a non-intrusive evaluation of a company’s cybersecurity vulnerabilities. This allows potential acquirers to gain deep insights into the risks facing a target company without disrupting operations, or tipping off stakeholders.
By leveraging SixMap, you gain an external attacker’s perspective on how exposed a company is to cyber threats. Our platform provides critical intelligence on which vulnerabilities pose the greatest risks, allowing you to prioritize cybersecurity as part of your acquisition strategy. This not only can help you protect your organization from costly breaches but also streamlines the post-acquisition integration process by ensuring that any security weaknesses are addressed early, if not before integration altogether.
For companies looking to make informed, data-driven decisions during the acquisition process, SixMap offers an indispensable tool to evaluate and manage cybersecurity risk.
