Cyber Crime Costs are Increasing
Organizations of all sizes struggle to keep up with the increasing scope and sophistication of cyber threats. Attacks on computers are become increasingly sophisticated, with potentially disastrous financial repercussions. In 2020, the average cost of data breaches to American businesses was $8.64 million, up from $7.91 million in 2018. The time it takes to find a breach is 280 days on average. The average cost for post-data breach response operations for American businesses is $1.76 million, which is the highest cost in the world for cybercrime.
Web-based assaults, ransomware, malware, compromised devices, phishing, and distributed denial of service (DDoS) attacks are just a few of the many types of cyber threats that middle-market organizations must contend with today. The majority of media attention is given to consumer data breaches, which can disrupt enterprises by seriously harming their finances and reputations. Cyber attacks can have serious repercussions, disrupt business operations, and jeopardize the company's ability to continue operating.
Even for businesses that have made significant investments in proactive defenses and their architecture for managing cyber risk, system disruptions caused by cyberattacks can result in substantial financial losses. Organizations whose primary source of income is derived from producing and disseminating goods while remaining operationally available (such as manufacturers, e-commerce companies, logistics-dependent providers in the transportation sector, etc.) or companies that depend heavily on data are those who may be most at risk.
Furthermore, ransomware assaults continue to gain momentum. All of the files on a computer or network are encrypted or locked when ransomware, a type of virus, is launched. The cybercriminal (also known as a "threat actor") demands a ransom, which is often paid in digital currency like bitcoin, in order to recover access to the files. Since the software can be installed, the data may be encrypted even when the computers are turned off, and the malware then targets data stored on the cloud, it looks that the next generation of ransomware is even more Machiavellian.
Evaluating and Understanding Cyber Insurance
A variety of expenses paid by an organization in connection with a cyber event are covered by cyber insurance coverage.
Policies typically cover losses incurred in connection with the insured's potential third-party liability for damages, regulatory fines, etc., as well as losses incurred directly by the insured (e.g., lost income, data restoration, extra expense, event management, costs spent on potential customer notification, etc.).
Policyholders may be compensated for lost revenue and other costs coming from a supplier or vendor cyber event, which doesn't always involve a malevolent threat actor and may also involve unanticipated system disruptions.
In terms of reputation, cyber insurance coverage can also pay for the costs of crisis management and public relations services required in the wake of an incident and for determining any brand harm.
A cyber insurance policy's media liability section might offer protection from losses due to online defamation and copyright infringement.
Leading companies are aware that using specialty insurance to reduce financial risk by helping to cover anticipated business disruptions is an essential part of any cyber preparation plan.
The ability to provide the financial security and risk transfer required to keep the organization moving forward rather than letting cyber threats keep it behind is one of the most significant roles cyber insurance can play.
Determining Your Coverage Needs: A Three-Step Approach
Companies should consult an expert when weighing their alternatives because cyber insurance policies are complicated and non-standardized. Cybersecurity experts are aware of, can match, and can connect corporate exposures with the right types of coverage. In order to avoid redundancy and maximize return on investment, they can also analyze whether cyber coverage might overlap with other insurance lines.
Businesses should see their cyber risk the same way they do any other risk exposure: as something they can manage but never totally remove or eradicate when consulting experts to assess their cyber insurance choices. A three-step process can help businesses better understand their vulnerabilities and alternatives when developing a coverage plan:
Chart risks. Create a chart showing the extent and limits of risk exposure. What dangers exist given the nature of your company? Based on your market presence, the products you manufacture, your planned markets, and your supply chain, what are your cyber risk vulnerabilities? What main hazards do you face?
Measure the threats. Examine the monetary cost of prior events in both your industry and more generally to have a better understanding of the frequency and severity of cyber events that potentially have an impact on your firm. Additionally, make an effort to assess the possible effects of new risks or loss scenarios.
Make a comprehensive plan. Your organization's overall cyber security strategy should include cyber insurance as a vital component, along with enterprise risk management, breach response plans, and incident response. Examine how much risk your business can transfer to insurance and how the expenses and insurance coverages for cyber risks fit into your overall risk appetite and risk appetite. Due to recent changes in the market, a thorough study is necessary to guarantee that the coverages are current and up to your standards.
Achieving and Maintaining Resiliency
Given the dynamic nature of cyber risk and business development, organizations should assess their cyber insurance policy on a regular basis to make adjustments for new threats and vulnerabilities.
Your insurance broker ought to be anticipating your needs, keeping up with these quick changes, and representing you to insurance companies. Threat actors are always changing, and if your organization's cyber risk awareness and preparedness are not keeping up, the consequences might be disastrous.
Any ideal organizational cybersecurity plan should have resilience as its goal. Being cyber resilient from the perspective of business continuity is being able to take a hit, recover, and reduce loss, downtime, and outages. A crucial element of this resilience is having the appropriate cyber insurance coverage in place.
For more information on optimizing your IT and securing your network, contact RCS Professional Services to speak with an IT professional or visit our website www.rcsprofessional.com. You can also visit on youtube channel to view our past live stream on Understanding Cyber Liability Insurance.