What Every CEO Should Know About Cyber Risk

Quick Answer

Cyber risk is a business risk, not only an IT issue. In 2025, stolen credentials and unpatched systems still drive many breaches, average breach costs sit around four to five million dollars, and new disclosure rules raise legal and reputational stakes. CEOs who align security to measurable outcomes, enforce strong identity controls, and validate defenses regularly reduce both incident probability and blast radius.

Why this matters now

• Costs are real, and persistent. IBM’s 2025 research places the global average breach cost around 4.4 to 5.1 million dollars, with multi cloud breaches on the higher end.
• Attack patterns are boring, and effective. Verizon’s 2025 report shows stolen credentials and exploited edge vulnerabilities leading many breaches. About 88 percent of basic web app attacks involved stolen credentials.
• Disclosure rules add urgency. Public companies must disclose material cyber incidents within four business days of determining materiality, and describe risk management in annual reports. Enforcement and scrutiny are rising.
• Macro risk is elevated. The World Economic Forum flags cyber insecurity and AI driven misinformation among top near term global risks, which pressures boards and insurers.

The CEO’s plain language model of cyber risk

Think in three layers that you already use elsewhere in the business.

1. Likelihood. How often an attacker can find a path in. Raised by weak identity, exposed services, and unmanaged third parties. Lowered by phishing resistant MFA, rapid patching, and vendor controls. Verizon’s 2025 data ties many breaches to credentials and edge flaws, which are directly controllable.
2. Impact. How much it hurts when something goes wrong. Driven by data concentration, flat networks, and slow restoration. Reduced by segmentation, immutable backups, and practiced response. ENISA’s 2025 analysis of 4,875 incidents notes ransomware and rapid exploitation, which reward organizations that can contain quickly.
3. Exposure. Your regulatory and contractual duties. Increased by weak disclosures or unclear vendor responsibilities. Reduced by clear governance, tested playbooks, and evidence that controls work. SEC rules make this visible to investors.

Cyber risk is the chance that a cyber event will disrupt your business or damage value, multiplied by the cost of that disruption, and shaped by your obligations to customers, investors, and regulators. You reduce it by cutting common entry points, limiting blast radius, and proving control effectiveness.

Five decisions only the CEO can make

1) Set the risk boundary, not the tool list

Ask for a one page risk statement that names the top business processes and the maximum tolerable downtime and data loss for each. Tie budgets to these outcomes rather than to point products. Use IBM and Verizon numbers as external benchmarks for potential loss and dwell time.

2) Make identity non negotiable

Require phishing resistant MFA for administrators, finance, and any role with broad data access. Shorten session lifetimes for sensitive apps and enforce conditional access. These steps counter the dominant initial access paths in 2025.

3) Close the front door

Patch and monitor internet facing systems first, including VPN, email gateways, and file transfer tools. Verizon’s 2025 data highlights exploited vulnerabilities as a top entry vector, right next to credentials. Measure time to patch for those assets every week.

4) Prepare to disclose

If you are public or planning to list, align with SEC disclosure expectations now. Know who decides materiality, who drafts the 8 K, and how you update investors. Build the narrative around measured readiness rather than promises.

5) Validate, do not hope

Commission independent offensive testing that mirrors current attacker paths, not only a checkbox scan. Start with identity, cloud, and your most critical SaaS. If you need a partner that does manual, human driven work, compare penetration testing services.

What good looks like in a modern program

Governance that investors respect

• A named executive owner for cyber risk who briefs the board quarterly.
• A clear control baseline, for example NIST CSF as the strategy layer, with evidence mapped to audits.
• A tested incident response plan that includes legal, finance, and communications. SEC rules focus on governance transparency, so demonstrate process maturity, not only tools.

Engineering that reduces attack surface

• Phishing resistant MFA on identity providers, VPN, and cloud consoles.
• Asset inventory for internet facing systems, with targets for patching and configuration drift.
• Network segmentation for critical systems and least privilege on admin accounts.
• Immutable backups with quarterly restore drills. ENISA’s 2025 reporting reinforces the value of hygiene and practiced resilience against fast moving ransomware.

Detection and response that match the threat

• Threat informed detections mapped to common techniques.
• Playbooks for token theft, business email compromise, and extortion.
• Measured response times, with runbooks to revoke tokens, isolate hosts, and disable accounts in minutes. Verizon’s web app findings make a strong case for identity centric detection.

A pragmatic 90 day CEO plan

Days 1 to 30, reduce likelihood

1. Mandate MFA for admins and finance. Enroll security keys or passkeys, remove SMS for those groups.
2. Patch exposed services. Weekly reviews of internet facing assets, with explicit owners.
3. Tabletop once. Run a two hour drill on a business email compromise and on a ransomware scenario. Assign who calls the bank and who handles disclosure.
4. Book independent validation. Start with a focused identity and perimeter engagement from a partner that tests manually. See vetted options through penetration testing companies in the UK 2025 if you operate in that market.

Days 31 to 60, limit impact

1. Segment and back up. Separate critical workloads and confirm offline or immutable backups.
2. Shorten sessions. Reduce token lifetimes and require step up on risk signals for sensitive apps.
3. Vendor access. Force suppliers to use your SSO and MFA, log all changes, time bound their access.

Days 61 to 90, prove it works

1. Board dashboard. Ship the first monthly metrics, see below.
2. Policy hygiene. Finalize an incident communication policy that aligns with SEC timing if you are subject to it.
3. Second emulation. Re test to confirm weaknesses actually closed. Continue quarterly.

Metrics your board will understand

• MFA coverage for high risk roles. Aim for 100 percent for admins and finance this quarter.
• Mean time to patch internet facing criticals. Target days, not weeks. Verizon’s exploited vulnerability trend makes this a must watch.
• Backup recoverability. Time to restore a key system, validated by drill, not only by policy.
• Detection to containment. Minutes to revoke tokens or isolate a host after a high risk alert.
• Third party exposure. Number of vendors with enforced SSO and MFA, plus last change log reviewed.

These are controllable levers that correlate with reduced breach cost and severity. IBM’s 2025 report links faster identification and containment with lower costs, which gives you a story investors accept.

Common CEO questions

Are we spending enough on security

Right question, incomplete. Spend is not a signal unless it buys specific risk reduction. Use the metrics above to show how spend changed coverage, patch time, and response speed. Compare your potential loss to IBM and sector figures to frame value.

What is the single highest leverage control

Strong identity, especially phishing resistant MFA and solid recovery, paired with fast patching of exposed services. That counters the top two breach paths in 2025.

How do new SEC rules change my exposure

They compress the timeline for decision making and disclosure, which makes governance and playbooks essential. You must determine materiality promptly and brief investors with clear facts.

Do we need a red team or a penetration test

Both have value. For most companies, start with a manual, goal driven penetration test that emulates likely attacker paths, then evolve to continuous emulation. Independent evidence also supports sales, renewals, and insurance.

What about AI risk

AI can reduce alert noise and speed investigations, but ungoverned AI can raise risk and cost. IBM’s 2025 research highlights breaches tied to shadow or poorly governed AI. Set policy before you scale usage.