Ransomware incident and 1-Star rating suggests security deserves more near-term focus from WestRock investors

Summary

WestRock provided an update in the past week on the January 25 ransomware incident. Per the statement, “The company is also executing measures like manual processes in response to customers’ requirements. WestRock is now steadily bringing its information systems back online in a controlled and phased manner”. Production at its mills has been adversely impacted.

Report

Analysis

The statement recognizes that the operational disruption stemming from the incident has stretched into a third week. Cyberhedge data clearly demonstrates that disruptions in excess of 2-3 days result in significant economic and financial losses for firms. As we stated in a January 27th note on the breach, we expect investors to be frustrated with the ongoing costs associated with remediation of this problem.

Moving forward, investors should also be closely looking at what this incident says about the company’s broader management of its digital technology. WestRock’s 1-Star Cyberhedge rating suggests there is plenty to worry about at a time when the company used its latest earnings call to highlight how important ecommerce has been to its growth.

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