The impact and influence of a recessionary cycle applies pressure across industries and institutions in ways both subtle and profound. But cost-cutting and belt-tightening in a security context often have a bigger and more concerning downside that extends well beyond the bottom line. In a space where minor missteps could potentially lead to major problems, it’s incumbent upon security professionals to look ahead to the forecast recession in 2023 and make sure they understand what they can be doing now to safeguard their interests.
Understanding what a recession could mean for the security function begins with recognizing that, in economics, as in risk management, a certain degree of uncertainty is baked in. Market watchers and economists can make predictions, but we never truly know when, and even if, the bottom will drop out of the market. With that in mind, security professionals and executives alike would be wise to remember that the following considerations and areas of emphasis should be addressed before leaner economic times manifest.
Industry and business models react differently to financial pressure
The impact of recession on operational stability and profitability can be extremely variable depending on the industry and the business model. The degree and extent of financial pressure on a given organization look very different for a professional services company versus a consumer goods supplier, for example.
Strategic planning for security budget cuts
To prepare strategically for potential budget cuts, you first need to understand how your organization works and how it is profitable. In situations where you're likely going to be called upon to recommend budget cuts to the security function, it’s critical to plan ahead and to be able to determine where you can take a marginal hit without materially affecting risk. Smart professionals look beyond the security sphere to get a feel for how the broader landscape and financial dynamics of an organization are likely to change in a recession.
How to preserve critical security functions
In a market discontinuity or harsh recession, the first place that employers look to cut back — and the source for a majority of significant cuts — is in people and benefits. Proactive security pros can work to preemptively insulate their critical team members and core functions. Consider contracting out positions, as it’s generally easier to negotiate a cut in the contract than make wholesale personnel changes. Because human nature and inevitable budgetary jealousies are often a factor in deciding where to make cuts, understanding the features of the cultural landscape of your workplace is also an asset.
How to have effective security budget discussions with decision makers
Security directors need to be superb communicators, making it clear to C-suite decision-makers what the security implications will be from proposed cuts. Be specific, making it clear where and how risk and exposure change and what the impact of a negative outcome could be. Don’t neglect to highlight the fact that risk is elevated during a recession, not just from outside sources but also because increased personal and professional pressures on employees can contribute to increased internal security risks. Incidents like theft and workplace violence can spike under the strain of new tensions and recessionary stresses.
Making the business case for security program budget
Security professionals who understand their company and have clarified the role they play in that company will find their position furthered fortified if they have established strong lines of communication with decision-makers well in advance of any recessionary disruption. Effectively making the business case for the people and programs you're supporting requires being an involved participant in the decision-making process and being comfortable communicating with the appropriate stakeholders and executives. For their part, C-suite decision-makers should work to invite security professionals to the table and be open to their feedback and counsel.
There has perhaps never been a time in recent memory when the global risk environment has been as dynamic as it is today. From economic instability and global public health crises to war in Eastern Europe, the disruptions, discontinuities, and potential security threats are complex and considerable. Conveying that complexity is a constant challenge for security professionals, and the prospect of a looming recession makes that task even more formidable.
But if you can focus on developing foundational clarity about process ownership; proactive strategy and preparation; a clear understanding of culture and company; and strong lines of communication with ownership, you are likely to find yourself and your team on solid ground, even in the most economically unstable and uncertain times.