“We tend to focus on how cyber exposure could create operational and financial risk, allowing someone with the ability to infiltrate our systems and cause financial harm.”

• Investors need to understand the overall IT infrastructure, be able to view all the different software platforms a company uses, understand where holes exist, and see the results of penetration testing. Most importantly, they need to see remediation
  recommendations that tie back to business processes, especially those that touch critical assets.
• It’s a unique security firm that is strong on the technical aspects of cybersecurity while being able to make actionable recommendations that business leaders understand in terms of specific business risks.

“I’m not an expert in this area, I’m never going to be an expert in it, and I don’t want to be an expert in it. I just want to rely on experts who can go do it.”

Clavis Capital Partners is a private equity firm that specializes in middle-market industrial companies. “We primarily invest in United States–based, traditional manufacturing companies,” says Todd Dauphinais, managing partner. “We are not specifically tech focused, although manufacturing is becoming more tech enabled and dependent. We’re not investing in pure-play tech companies.”

This investment focus shapes how Clavis views and evaluates cyber risk when looking at potential investments. “If you’re a critical infrastructure business, the risk is different and more pronounced than if you’re a old-line manufacturing business, which again is different from a pure tech business or data center,” Dauphinais explains. “Everything’s connected now, so if somebody with the means and the desire wanted to completely shut one of our companies down, they could do so. We tend to focus on how cyber exposure could create operational and financial risk, allowing someone with the ability to infiltrate our systems and cause financial harm.”

Dauphinais says that this kind of financial risk is very real for Clavis.

This is an excerpt from 7 Experts on Evaluating and Managing Cyber Risk for Investors.  This eBook was generously sponsored by BlueVoyant.