Clorox Crisis Shows Cyber Risk’s Harsh Business Downside

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I am a professor in executive and graduate business programs at the Villanova University School of Business. My teaching, writing and consulting focus on contemporary strategy, business risk, performance measurement and financial reporting issues. I also develop and deliver customized executive education programs for large global companies, professional services firms, and industry associations. I have co-authored five books and published over 100 articles in various academic and professional journals. To learn more about my career and current work, please see noahbarsky.com.

spentWhile the cybercrime details remain unclear, Clorox disclosed that it was forced back to manual processes, as automation systems took nearly six weeks to normalize. That left retailers and consumers scrambling for merchandise.

The capital markets have not responded kindly, as Clorox shares are down over 25% since the August news, trading at or near five-year lows. That’s over $3 billion in lost market valuation. The damage is measurable and the lessons should be clear. As cyber threats surge, the alarming scale, speed and scope of the upheaval at Clorox should motivate senior leaders in all organizations to question, assess and fortify business resilience, operational agility and technological readiness —While no company is immune to cyber risk, strong, substantive digital era leadership is widely lacking.

The SEC’s long-awaited cybersecurity regulations exclude board tech expertise. Not surprisingly, cyber expertise on boards remains rare. According to recentby the Wall Street Journal, only “107 directors at 113 [S&P 500] companies had professional experience in cybersecurity.” Further, those leaders “held a total of 124 [2.3%] of S&P 500 board seats.”no plans for a board technology committee and none of the twelve seated and nominated directors has any credible tech experience.

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