Why is Cybersecurity Insurance Important?| July 28, 2020
When it comes to cybersecurity threats, every company is a potential target. There is growing uncertainty and concerns about the cybersecurity industry’s ability to protect its customers, from schools and universities to small businesses and mom-and-pop storefronts, as well as Fortune 500 companies.
Before the global pandemic, cybersecurity insurers saw many claims. However, with abrupt changes in how and where people work, there has been a massive increase in COVID-19-related cyberattack claims. This highlights the need for all organizations and businesses to pay close attention to internal data security shortcomings and plan accordingly.
Some of the factors driving cybersecurity risk include:
Increased exposures across networks, devices, and software
- More software offerings are being implemented by companies of all sizes, which results in code that hackers can exploit.
- Increases in a long-term change to work-from-home protocols. Employees tend to be the weakest link when it comes to cybersecurity. Using personal devices and personal networks creates added vulnerabilities. Also, VPNs have significant security holes which allow for an entire organization to be hacked.
- The lack of good cyber hygiene, such as a good password change policy, updated software/hardware, and frequent patching, is also a contributing factor.
Cyber hackers are hard to identify and even harder to catch
- Hackers prefer to hack across borders and even work in groups, making traceability and accountability nearly impossible for law enforcement to coordinate their efforts. Many attackers exploit vulnerabilities by phishing and harvesting credentials for future, higher value attacks.
Cybersecurity technologies do not adapt to threats until after the fact
- Hackers use this time to improve their techniques. Because the process is mainly reactive, there is an increase in hacking opportunities due to a lack of accountability and substantial financial rewards. This also gives hackers plenty of incentive to keep innovating their methods.
As the increase in cyber threats continues to affect businesses, two primary outcomes have emerged.
- The inability of cybersecurity providers to guarantee the effectiveness of their solution or products to stop a breach.
- The near impossibility of quantifying the cost/benefit of a cyber strategy, considering the likelihood and severity of a cyber breach is unknown.
So what is the solution? Cyber insurance.
What is Cyber Insurance?
Cyber insurance, otherwise known as cyber risk insurance or cyber liability insurance, gives businesses and organizations security, and transfers cyberattack or security breach costs. Just like how car accident coverage works! In some cases, cyber insurance may also provide access to cyber breach coaches and other service providers to help aid recovery efforts.
The insurance industry is best poised to solve the cybersecurity problem. That’s because insurance carriers have the same goal as the insured: Avoid security breaches. The insured company does not want to get breached, while the insurance provider does not want to pay for the loss. The risk exposure for insurers is amplified since cyber risk understanding is less developed than insurance lines such as life, homeowners, and auto.
Additionally, large-scale breaches and viruses make headlines (think Facebook and Target, for example!), which drives businesses to demand coverage. As the cyber insurance market grows, carriers will gain more data. This data will enable insurers to identify the nature and severity of breaches, associate them with actual losses to minimize future and similar attacks, assess risk levels, and provide qualitative and quantitative data to minimize damage and loss.
What does Cyber Insurance cover?
- Data loss and recovery
- Business interruption or revenue loss
- Loss of transferred funds
- Computer fraud
- Cyber extortion
- And more!
How do I get started?
The best thing you can do is to create comprehensive cybersecurity policies across your organization. This will ensure that your users aren’t creating vulnerabilities or risks through email or other device usages. From there, ongoing training will help maintain security measures. You’ll also want to consider working with a cybersecurity partner who can keep your systems and networks secured, up-to-date, and protected in an attack or breach. Most cyber insurance policies will require these measures to obtain coverage.
To learn more about cyber insurance policies and providers, contact the IT team of experts at Concensus.