CEOs Feel Under-Prepared for Cyber Threats, More Companies Passing Cost of Inflation to Customers, Finds Marcum-Hofstra Survey
DECEMBER 13, 2022 (New York City, NY) – A majority of CEOs say their companies are not fully prepared for a cybersecurity threat, and an increasing number say their companies are unable to absorb increasing costs stemming from inflation. These are some of the key findings in the latest CEO survey from Marcum LLP and Hofstra University’s Frank G. Zarb School of Business.
Marcum-Hofstra CEO Survey No. 5 was conducted in November. Data compare to the previous survey in September.
Less than one-third of CEOs (31.8%) said their company is well-prepared for any cybersecurity threat they might face in the foreseeable future, while 58.1% said they are adequately prepared but could be doing more. Ten percent say they are behind in efforts to protect their companies from breaches.
CEOs revealed some of the best practices their companies are employing to minimize threats. Among their answers:
- “We perform a risk assessment before introducing new processes or activities, or changes to existing processes or activities, or when the company identifies a new hazard.”
- “We are creating data backups and encrypting sensitive information, updating all security systems and software, conducting regular employee cybersecurity training, and requiring all employees to use strong and complex passwords.”
- “Constant communication and training among the employees and doing outreach calls to test how they handle certain frauds and phishing emails that they have to detect and send up to our operations team.”
- “We constantly update our security software and create alternative systems in case we are hacked.”
- “We are providing second level security in all areas where before we didn’t.”
- “We network with peers and hire several consulting firms to help identify and mitigate all risks.”
- “Two-level authentication sign-in, blocking more browsing on employees’ computers, nightly sweeps of all computers.”
Inflation, Recession & Staffing
Although slightly fewer CEOs reported their companies are being impacted by inflation (72.1% vs. 73.2%), there are more business leaders passing on increasing costs to their customers – 36.8% compared to 33.4% in the September Marcum-Hofstra survey).
A large majority of CEOs (89.9%) continue to say they are at least somewhat concerned about a recession in the coming year, but this represents an improvement over the 93.6% who expressed this concern in September. Just under half — 46.5% — indicated they are very concerned, compared to 54.6% previously.
About half of CEOs (47.7%) have begun to curtail or freeze hiring, or foresee doing so, while 9.3% say they anticipate having to lay off employees in the next year. Just over half (51.2%) are taking a wait-and-see position for now.
While four out of five CEOs remained positive in their outlook on the business environment, as a whole they were less optimistic. The 10.5% who rated their outlook as very positive (“10” on a scale of 1-10) was virtually unchanged, but the 32.7% rating their outlook “8” or higher was a notable decrease from 39.0% in September. Overall, those on the positive side of the scale (“5” or higher) dropped from 84.0% to 80% in the current survey.
“Our index of CEO optimism has been remarkably steady throughout the five survey periods of 2022, starting out at 6.5 in January and ending at 6.4 in November, with only moderate fluctuations in between. This suggests that CEOs have business planning well in hand and are confident in how they are approaching their markets,” said Jeffrey M. Weiner, Marcum’s chairman & chief executive officer.
“Notably, we saw the greatest increases in outlook in the services sector, including financial services, healthcare, and food/beverage/hospitality, while CEOs in the construction, manufacturing/distribution, and retail and consumer goods industries were less sanguine. Hopefully they are leveraging their resources not only to drive efficiencies in the current inflationary environment but to invest in technology, staffing, training, and strategic analysis to position themselves for the near- and long-term future.”
Janet Lenaghan, dean of the Zarb School of Business, noted that cybersecurity remains a challenge for mid-market CEOs, who recognize the risk but may not be making the necessary investment to fend off threats, particularly in this unpredictable economic climate.
“Major hacking episodes involving government or global companies get a lot of attention, but the risk to mid-market companies is just as serious, perhaps even higher, because they may lack the budget and expertise to protect themselves,” Lenaghan said. “Like inflation and the supply chain, increasing cybersecurity threats are another unpredictable economic variable CEOs need to navigate.”
Business Planning Influences
Continuing the trendline first established in June 2021, the top three influences on business planning were unchanged. Economic concerns was cited most often, ranked number one in 58.9% of responses, up from 50.6%. In the continuing tight labor market, 45.7% of CEOs cited availability of talent as a key influence, down slightly from 46.1% in September. Reflecting concerns about price inflation, rising material/operational costs was the third most common influence, cited by 41.9% of CEOs, up from 40.5%.
About the Survey
The Marcum-Hofstra CEO Survey is a periodic gauge of mid-market CEOs’ outlook and their priorities for the next 12 months. The survey polls the leaders of companies with revenues ranging from $5 million to $1 billion-plus. The latest survey interviewed 269 mid-market CEOs.
It is conducted as part of the Zarb School of Business MBA curriculum, and developed and analyzed by Hofstra MBA students led by Dr. Andrew Forman, associate professor of international business and marketing, in partnership with Marcum.
“The ongoing concerns regarding cybersecurity and the recent inflationary cycle provide students with a valuable lesson in the need for leaders to simultaneously plan for the long term while addressing less foreseen shorter-term issues as they arise,” Forman said.
About the Frank G. Zarb School of Business at Hofstra University
Hofstra University’s Frank G. Zarb School of Business prepares students to become tomorrow’s global leaders. Located just 25 miles from New York City, Zarb students have access to internships and networking opportunities across every industry. The Zarb School combines entrepreneurial, hands-on learning and research with real-world experience and mentorship in state-of-the-art facilities, including a Behavioral Research in Business Lab, Center for Entrepreneurship, and academic trading room. Our undergraduate and graduate programs in accounting, management and entrepreneurship, marketing and international business, finance, and business analytics are ranked and recognized by US News & World Report, Princeton Review, Pets & Quants and Fortune Magazine.
About Marcum LLP
Marcum LLP is a top-ranked national accounting and advisory firm dedicated to helping entrepreneurial, middle-market companies and high net worth individuals achieve their goals. Marcum’s industry-focused practices offer deep insight and specialized services to privately held and publicly registered companies, and nonprofit and social sector organizations. The Firm also provides a full complement of technology, wealth management, and executive search and staffing services. Headquartered in New York City, Marcum has offices in major business markets across the U.S. and select international locations. #AskMarcum.