Dan Burke is the director of strategy, risk, and compliance for AppDynamics, a company acquired by Cisco in 2017. Burke and his team are a vital part of the Cisco acquisition process in helping acquired companies adhere to a higher level of cybersecurity. This blog is the fourth in a series focused on M&A cybersecurity, following Shiva Persaud’s post on When It Comes to M&A, Security Is a Journey.
Engaging Earlier to Identify and Manage Risk
Part of the secret to Cisco’s success is its ability to acquire companies that strengthen its technology portfolio and securely integrate them into the larger organization. From the outside, that process might appear seamless—consider Webex or Duo Security, for instance—but a fruitful acquisition takes tremendous work by multiple cross-functional teams, mainly to ensure the acquired company’s solutions and products meet Cisco’s rigorous security requirements.
“My team is responsible for aligning new acquisitions to Cisco controls to maintain our compliance with SOC2 and FedRAMP, as well as other required certifications,” says Burke.
When Cisco acquires a new company, it conducts an assessment and produces a security readiness plan (SRP) document. The SRP details the identified weaknesses and risks within that company and what they need to fix to meet Cisco standards.
“In the past, my team wouldn’t find out about an acquisition until they received a completed SRP. The downside of this approach was that the assessments and negotiations had been done without input from our group of experts, and target dates for resolution had already been decided on,” shares Burke.
“We needed to be involved in the process before the SRP was created to understand all risks and compliance issues in advance. Now we have a partnership with the Cisco Security and Trust M&A team and know about an acquisition months before we can start working to address risks and other issues—before the SRP is completed and the due dates have been assigned,” Burke adds.
“Another issue resolved in this process change is that Cisco can gain earlier access to the people in the acquired company who know the security risks of their solutions. During acquisitions, people will often leave the company, taking with them their institutional knowledge, resulting in Cisco having to start from scratch to identify and assess the risks and determine how best to resolve them as quickly as possible,” says Burke. “It could be vulnerabilities in physical infrastructure or software code or both. It could be that the company isn’t scanning often enough, or they don’t have SOC 2 or FedRAMP certification yet—or they’re not using Cisco’s tools.”
“Third-party vendors and suppliers can also present an issue,” he adds. “One of the biggest risk areas of any company is outside vendors who have access to a company’s data. It’s vital to identify who these vendors are and understand the level of access they have to data and applications. The earlier we know all these things, the more time we must devise solutions to solve them.”
“Now that I’m in the process earlier, I can build a relationship with the people who have the security knowledge—before they leave. If I can understand their mindset and how all these issues came about, I can help them assimilate more easily into the bigger Cisco family,” says Burke.
Managing Risk During the M&A Process
The additional benefits of bringing teams in earlier are reduced risk and compliance requirements can be met earlier. It also provides a smoother transition for the company being acquired and ensures they meet the security requirements that customers expect when using their technology solutions.
“Without that early involvement, we might treat a low-risk issue as high risk, or vice versa. The misclassification of risk is extremely dangerous. If you’re treating something as high risk, that’s low risk, and you’re wasting people’s time and money. But if something’s high risk and you’re treating it as low risk, then you’re in danger of harming your company,” Burke shares.
“The key is to involve their risk, compliance, and security professionals from the beginning. I think other companies keep the M&A process so closely guarded, to their detriment. I understand the need for privacy and to make sure deals are confidential but bringing us in earlier was an advantage for the M&A team and us,” Burke adds.
Ensuring a Successful M&A Transition
When asked what he thinks makes Cisco successful in M&A, Burke says, “Cisco does an excellent job of assimilating everyone into the larger organization. I have worked at other companies where they kept their acquisitions separate, which means you have people operating separately with different controls for different companies. That’s not only a financial burden but also a compliance headache.”
“That’s why Cisco tries to drive all its acquisitions through our main programs and controls. It makes life easier for everyone in terms of compliance. With Cisco, you have that security confidence knowing that all these companies are brought up to their already very high standards, and you can rely on the fact that they don’t treat them separately. And when an acquisition has vulnerabilities, we identify them, set out a remediation path, and manage the process until those risks are resolved,” Burke concludes.
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