As having cybersecurity becomes understood as key to mitigating cyber risks in a company, so has having cyber insurance.
Now, in increasing numbers, organizations purchase cyber insurance policies to protect themselves from the possibility of a significant cybersecurity incident. By having cyber insurance, companies are able to quickly have the financial and logistical means to recover and operate efficiently again.
Cyber risk is the number one concern across all businesses. Travelers 2019 survey found that among cybersecurity risks, security breaches and unauthorized access to financial accounts are the top cyber risk concerns for businesses. The number of such cyber events has increased dramatically since 2015. For large businesses, breach victims increased 73%, for medium-sized businesses, victims increased 100%, and for small businesses, victims have increased by 200%. Cyber-attacks can lead to costly aftermath both financially and in operation for businesses. While it is important to have cybersecurity measures, it does not recover the costly damage done after damaging attacks occur. To continue operation of businesses, cyber insurance is another important measure companies now take to protect their businesses, especially because no business is every fully risk-free from cyber-attacks.
Given such understanding, financial services, retail, and healthcare companies have been the largest consumer of cyber insurance. In mid-2019, a survey was released by Risk Based Security, that along with the mentioned three industries, other industries that have followed suit in purchasing cyber insurance is Public Administration, Information, Professional or Scientific, Education, and Manufacturing. Though optional as with any insurance, it has become a standard practice to possess cyber insurance in these businesses as all of these industries’ systems manage, store, and transmit digital data that can be infiltrated by malicious cyber actors. Any business interruption in their systems and the system downtime costs can become exorbitantly high. Along with financial consequences, such incidents can adversely affect customers, business competition, business reputation, citizens, national security, and public safety.
However, it is important to note that having cyber insurance only transfers risk costs, but it does not mitigate the risks from actually happening. It is important to have both cybersecurity measures and cyber insurance for protection, smooth response, and recovery.
There are preventive measures your organization can take to defend against a cyber attack.
LIFARS offering Free 30-minute consultation on cyber resiliency.
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