In the wake of COVID‑19 and the global lockdown, IWG has lost two-thirds of its market value in the span of two weeks. Though it was considered to be in a strong position to take advantage of WeWork’s financial governance failure heading into 2020, the Cyberhedge cyber-financial model alerted us to the potentially negative impact of its weak cyber governance prior to the current market troubles.
Why does Cyber Governance matter?
Investors need to know whether management is overinvesting or underinvesting in securing its most valuable asset—technology—relative to the increasing risks the company faces as a result of the ongoing digitization of the business. IWG has endured a dramatic share price hit amidst COVID‑19, and its Cyberhedge 1-Star rating indicates significant underperformance and heightened downside financial risk due to cyber at a time it can least afford a secondary shock.
What does the company need to do moving forward?
IWG can regain its footing as part of the economic recovery, but it will need to improve its cyber governance to reduce the risk of a further negative shock in the form of a cyber-related operational disruption like ransomware. However, the company’s net cash to current liabilities will worsen amidst the crisis. The likely result is a cash crunch where IWG has a limited ability to allocate budgets to anything other than overhead, interest expense and mission critical activities.