Cyber Risk Management: Shield Your Organization from Cyber Threats
The rapid growth of technology and digitalization has opened up new business avenues for companies seeking to reach out to more and more customers and retain the competitive edge. This increasing reliance on technology has also, however, left businesses susceptible to increased cyber threats and risks. According to a report by Cybersecurity Ventures, cyber-crime will continue its accelerated growth over the next five years and could cost global businesses a whopping $6 trillion by 2021.
From fraud and identity theft, to malware, phishing scams, DDoS attacks, and even spam mail—the cyber threat landscape continues to evolve at an unimaginable pace, sparing no one. Industry estimates suggest that more than 33% of companies that reported a security breach in 2016 saw a revenue loss of over 20%—in today’s cutthroat environment that can be devastating for any business. Some of the key cyber risks include:
- Security breaches that let a cybercriminal steal sensitive information
- Network compromise that causes a business to be interrupted
- Ransomware instances where a hacker holds a network or critical data to ransom
- Introduction of malware and other malicious computer codes
- Unintentional human error that leads to disclosure of confidential data
Cyber Insurance Protects Businesses When Needed Most
This underlines the need for a comprehensive cyber insurance policy. Cyber liability insurance is an often-neglected option that has been around for a long time. However, with growing instances of cyber-attacks and related security breaches, its relevance is being realized afresh across industries. Cyber insurance has the ability to mitigate the possibly catastrophic results of a breach. While it may not be able to stop a cyber-attack from happening, it can definitely limit its impact by protecting networks, computers, programs, and data from attack, damage, or unauthorized access. Risks covered by insurance carriers include:
- Business interruption
- Criminal rewards
- Crisis management
- Cyber extortion
- Data breach
- Identity theft
Industry estimates suggest that the 80% of healthcare companies buy cyber insurance making healthcare the biggest consumer of cyber liability insurance. Financial services come in second, followed closely by the retail sector. The National Association of Insurance Commissioners (NAIC), along with state insurance regulators, is actively collaborating with relevant agencies like financial regulators, the Congress, and the President’s office to develop a strategic roadmap for protection against specific threats by developing the following methods:
- Insurance data model law to establish standards for data security
- Roadmap for cybersecurity consumer protection regulation guidance
- Reporting requirements for insurers to track cyber insurance policies issued in the marketplace
What to Expect in the Cyber Insurance Space: Key Trends
The cyber insurance market has witnessed rapid growth in the past decade riding on the need for mandatory notification. Industry estimates put the global cyber insurance market at $2 billion in premiums with 90% of the demand coming from the US. According to Nigel Pearson, the global head of Fidelity, AGCS, the cyber insurance market is growing by double-digit figures year-on-year, and could reach $20 billion or more by 2025.
There are some key trends driving this growing demand for cyber insurance. The rise in digitalization and interconnectedness, and ‘commercialization’ of cybercrime has increased the frequency and severity of attacks. We will see this primary trend in this space over the next few years. Additionally, with the possibility of regulation on data protection becoming increasingly rigorous and demanding, a higher number of notifications and significantly larger fines for data breaches in the future are expected.
Other trends include a growing potential of business disruption, IP theft, and ransomware; threat from vulnerability of industrial control systems; and continuing lack of foolproof cybersecurity solutions. While large companies have been quick to embrace cyber insurance, an increasing number of small and medium business are also expected to purchase cyber liability insurance in the next few years.
While there have been several major instances of cyber-attacks in recent years, a truly catastrophic cyber event, with severe, far-reaching impact may well be on the cards. Such an event may result in substantial financial damages, in turn raising awareness and demand for cyber insurance. The question is, do we want to wait for such a scenario? Learn how cyber insurance can protect you from cyber risks here.