Automating Cyber due diligence as part of the M&A process

Introduction

Mergers and acquisitions (M&A) can bring many benefits to businesses, including access to new markets, technologies, and talent. However, these transactions also come with their own set of risks, such as cyber-attacks and data breaches. As digital technologies become increasingly important to businesses, conducting thorough cyber security due diligence during the M&A process has become more critical than ever. Despite this, the current process of cyber security due diligence during M&A is often manual, cumbersome, and lacks standardization. In this case study, we'll examine how our platform helped a company automate their cyber due diligence process and quantify the risks in financial terms.

Client

A top consulting organization using our platform to automate cyber risk due diligence for the M&A opportunities

Challenge

Our partner, a top consulting organization, faced various challenges in the M&A cybersecurity due diligence making the process difficult and time-consuming. One of the significant challenges is that the process was often manual and lacked standardization, making it challenging to compare the cybersecurity risk of different companies. Additionally, assessing the cybersecurity risk of a potential acquisition target required highly skilled and costly resources. Furthermore, there was a lack of visibility into the financial risks posed by cybersecurity issues which can result in significant financial losses after the acquisition, and, such assessments need to have a prioritized roadmap that can be justified and backed by quantified financial impact.

Solution

To address the challenges faced by our partner in M&A cybersecurity due diligence, Alfahive offered an innovative solution that automated and streamlined the process. Our Cyber Risk Automation platform is designed to simplify, standardize, and automate the cybersecurity assessment of potential acquisition targets. Our platform provides easy access to financial information on cybersecurity risks, providing a more comprehensive and trustworthy report for M&A due diligence. Our solution allows for the identification of high-risk areas, a prioritized roadmap, and quantified financial impact to help prioritize the areas of cybersecurity that need the most attention.

Implementation

The implementation of Alfahive's cyber risk automation platform involved the following steps:

• Choose from pre-curated, pre-built scenarios offered by Alfahive that are based on ML algorithms and extensive industry, region, and cyber insurance data.
• Customize the scenario based on individual company requirements by adding cost and control inputs.
• Baseline the scenario to understand the financial impact for the M&A entity.
• Utilize Alfahive's dashboards to report on the financial impact of each scenario.
• Use the planning capability on Alfahive's platform to include prioritized recommendations and expected results as part of the M&A Business Integration Case.

Result

• Improved speed and reduced cost
  With the use of the Alfahive platform, the manual workload of consultants was reduced through the automated controls assessment and pre-curated risk scenarios, which led to a 50% reduction in output time and allowed for multiple assessments to run concurrently. The efficiency gained from the pre-curated scenarios allowed the customer to reallocate their team, leading to a reduction in headcount costs by approx. 30%.
• Improved visibility and integration with financial due diligence assessment
  By leveraging the Alfahive platform, our customer was able to directly demonstrate the dollar value associated with financial/revenue risk, data loss risk, compliance risk, and brand risk to its clients. This approach provided a level of visibility and focus that other rating mechanisms did not offer as part of the due diligence process.
• Fiscally sound integration case
  The output from the planning and prioritized dashboard helped our partner provide clear and definitive actions for their clients as part of the integration business case, which helped to reduce cyber risk exposure. As a result, our customer was able to validate or reduce the cyber insurance coverage recommended to their clients, leading to a fiscally sound integration case and providing valuable insights to their clients.

Summary

The case study highlights the challenges faced by a top consulting organization in the M&A cybersecurity due diligence process. The manual and non-standardized process made it difficult to compare the cybersecurity risk of different companies. The Alfahive platform helped solve these challenges by providing pre-curated risk scenarios, automating control assessment, and reducing the output time by approximately 50%. The platform's efficiency and speed aided the customer to redistribute the team and reduce headcount costs by about 30%. Furthermore, the platform provided increased visibility into the financial risks and helped the customer create a fiscally sound integration case, lowering cyber insurance premiums.

We welcome proactive organizations to benefit from our complimentary two-week value discovery pilot utilizing our platform and join us in automating cyber risk due diligence as part of the M&A process.