Retailers Cite Cybersecurity as Top Risk Factor: BDO

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Retailers Cite Cybersecurity as Top Risk Factor: BDO

05/31/2016
In today's increasingly digital world, cybersecurity concerns are top of mind for all retailers for the first time in the history of BDO USA's tenth annual Retail RiskFactor Report. According to BDO's analysis of risk factors listed in the most recent 10-K filings of the 100 largest U.S. retailers, risk associated with a possible security breach was cited unanimously by retailers, claiming the top spot, up from the 18th spot in 2007.

Since major retail security breaches began making national headlines in 2013, retailers have become acutely aware of the growing cyber threat and cyber-related risks. Between new point-of-sale systems and evolving digital channels, the industry faces unique vulnerabilities: Retailers are responsible for safeguarding consumer data as well as their own, in addition to protecting against potential gaps in security related to third-party suppliers and vendors.

"2016 marks the 10th anniversary of our retail risk factor analysis, and throughout the decade, we've seen the retail landscape undergo a dramatic evolution in response to the recession, new and maturing e-commerce channels and evolving consumer preferences," said Doug Hart, partner in BDO's Consumer Business practice. "Retailers over the years have proven to be in tune with the industry-wide issues and trends that could pose risks to their businesses, and they are clearly not tone deaf when it comes to reacting to the urgency of cybersecurity."

The following chart ranks the top 25 risk factors cited by the 100 largest U.S. retailers:



Top 20 Risks for Retailers

2016

 

2015

 

2014

General Economic Conditions  

#1

100%

 

#1

100%

 

#1

100%

Privacy Concerns Related to Security Breach

#1t

100%

 

#4t

99%

 

#8

91%

Competition and Consolidation in Retail Sector  

#3

98%

 

#1t

100%

 

#3

98%

Federal, State and/or Local Regulations

#4

96%

 

#1t

100%

 

#2

99%

Natural Disasters, Terrorism and Geo-Political Events

#5

94%

 

#7

96%

 

#13

87%

Implementation and Maintenance of IT Systems

#6

93%

 

#4

99%

 

#7

92%

U.S. and Foreign Supplier/Vendor Concerns               

#6t

93%

 

#6

98%

 

#4

96%

Legal Proceedings

#6t

93%

 

#9t

95%

 

#8t

91%

Labor (health coverage, union concerns, staffing)

#9

91%

 

#7t

96%

 

#5

94%

Impediments to Further U.S. Expansion and Growth

#10

90%

 

#12t

92%

 

#17

78%

Dependency on Consumer Trends

#11

88%

 

#9

95%

 

#6

93%

Consumer Confidence and Spending   

#12

87%

 

#15

89%

 

#8t

91%

Credit Markets/Availability of Financing and Company Indebtedness

#13

85%

 

#11

94%