The digital age of today’s world has seen the ever-increasing vulnerability of secure information. Between identity theft and credit card fraud, no information seems 100 percent secure.
The same goes for large companies. As major retail branches like Target make national headlines for recent security breaches, it is no surprise that cybersecurity is a top concern for retailers all across the globe.
Cybersecurity Tops the List of Concerns for Retailers
A new report from BDO USA analyzed the risk factors that 100 of the largest U.S. retailers listed as their biggest concern, and cybersecurity took the top spot across the board — a huge jump from its 18th place spot in the 2007 findings. The digital world moves at such a lightning fast pace that retailers may feel the pressure of safeguarding their own identity and the identity of their many consumers while staying on top of possible gaps and holes that might exist when working with different vendors. The task seems almost impossible.
On the 10th anniversary of BDO’s report, a partner in the BDO’s Consumer Business practice, Doug Hart, highlights these findings as the result of the retail landscape’s “dramatic evolution in response to the recession, new e-commerce channels and evolving consumer preferences.” Retailers want to stay on top of trends that could “pose as risks to their businesses,” Hart stated, and cybersecurity is definitely at the top of the list.
To see the full list, check out the following BDO chart which compares the top 20 risks for retailers over the past three years.
Government Interference and Secure Payments
Other concerns that were highlighted in the report included risks that were associated with the legislation pertaining to data privacy — a whopping 76 percent of those retailers surveyed cited this as an important issue for the future. This is no surprise when we consider the recent battle between the U.S. government and Apple over the unlocking of criminals’ iPhones and President Obama’s newly minted Commission on Enhancing National Cybersecurity. The question of how much access the government should have to shared and private information is likely a discussion that will continue evolving in the year to come.
The report also discusses the weaknesses of the retail industry in regards to credit card authorization and authentication. The specific Europay, Mastercard, and Visa standards should have been enacted by all major retailers by the first of October in 2015. However, only about 40 percent of the retailers have done so.
Without a stricter scrutiny on retailers and enforcement of the mandatory EMV chip-compliant payment systems, Shahryar Shaghaghi, the Head of International BDO Cybersecurity, says that “online and mobile transactions remain vulnerable to credit card fraud and identity theft, and POS systems can still be hacked and provide an access point to retailers’ networks.”
E-Commerce vs. Brick and Mortar Establishments
While consumers continue to demand better and more seamless mobile and online shopping experiences, the physical locations of larger retailers have been feeling the pinch of risk associated with both leasing and owning real estate (up to 54 percent in this year’s report own real estate) and the bankruptcies of other large chains, as well as foot traffic in prime locations — which moved up nineteen percentage points.
Consumers are also demanding better and faster shipping, which affects the risk factors associated with mundane supply costs like paper, packaging, and printing: they’re up from only seven percent last year to seventeen percent this year. Currently, e-commerce only holds a seven percent share of the consumer market. However, that number is likely going to steadily increase in the future.
Overall, retailers are still largely concerned with general economic risks and the current conditions of the economy. Even in 2008 (before the recession) this factor held second place. Since then, that same concern has stayed tied to the top tier of major risk factors for retailers.