Risk Cooperative CEO Dante Disparte sits down with Brunswick’s Siobhan Gorman to discuss how cyber attacks are redefining what “risk” means for M&A
The infamous political adviser Niccolò Machiavelli wrote, “Never was anything great achieved without danger.” Sage words for an aspiring politician, but not comforting for CEOs leading what they hope are transformative mergers or acquisitions.
Executives overseeing deals have undoubtedly heard that their businesses are vulnerable to cyber attacks. But how much more vulnerable are they when hosts of advisers and third parties are involved, millions – or billions – of dollars are at stake, and employees, customers, regulators, investors, and even the media are watching closely? The fallout from a 2016 cyber attack on Yahoo!, as it was in the process of being acquired by Verizon, lowered the deal’s price tag by $350 million.
In response to this growing threat, and amid an uptick in global M&A activity – which climbed almost 9 percent in Q1 2017 (see “Dealmakers see ‘Trump Bump,’” Page 10, for more insight) – a niche solution to manage cyber risk is gaining popularity: insurance policies tailored to cover the damage caused by cyber attacks during M&A.
Dante Disparte is CEO of Risk Cooperative, which operates at the intersection of three complicated, technical fields: insurance, risk management and cybersecurity. In a conversation at Brunswick’s Washington, DC office, from which this interview is excerpted, Disparte acknowledged the challenge of quantifying the risk a cyber attack poses. “The events that are much harder to measure are the ones that scare us: the theft of IP, crippling of systems, permanently rendering data useless.”
Today, having cybersecurity policies during an M&A, or even conducting basic cyber due diligence, aren’t regulatory requirements. Disparte thinks that’s likely to change. But rather than simply a compliance box to tick, Disparte believes the best practices and transparency involved in insurance have a much broader role to play, acting as “a catalyst for business rather than a cost of business.”