Why Should Insurers Think About Cyber Risk?
We’re in a fast-developing age in which technology manages almost every part of life. With the rise of technology such as AI which has the capability of collecting detailed customer insights, customers will be looking towards the insurer for assurance that their data is protected. Whether that’s directly or indirectly insurers and most other business sectors will have a duty to protect their customer’s data.
Cyber-risk could mean a risk of financial loss, damage to the reputation of an organisation or failure of its information technology systems and software. There are several threats and layers of vulnerabilities, and a cyber-incident can lead to big losses for the companies affected.
Businesses are expanding their efforts to put as many safeguards as possible in place to prevent a data breach. They are upscaling their prevention controls in infrastructure and security services, but one of the biggest safeguards gaining popularity to help companies manage their risks is cyber insurance.
Cyber insurance is changing the way we look at risk. Even small, low profile companies are at risk of a cyber-attack, not just the big corporations. That risk needs to be considered in the context of the business, this creates opportunities for the insurance industry to provide a wider product portfolio, to help businesses to manage their risk and the impact of cyberattacks.
Cyber-risk has created a gap in the market, and it will be a topic customers will be quick to address and with availability or effectiveness of coverage being sometimes inadequate and outdated it is something insurance companies need to focus on.
Cyber as a risk factor touches on many aspects of a business and aspect of the risk will also touch insurance products. A business will require specialist guidance regarding possible risk so it is important for the insurer to build the skills of their workforce and create the culture and perspective needed to position themselves to respond to the changing business landscape.
Common types of cyber incidents include; privacy breach where an unauthorised disclosure of personal data occurs, Hacking attack or unauthorised access which results in a loss of data, Cyber-Fraud when and an illegitimate financial transaction occurs, cyber-extortion when Ransomware impedes access to data or network until a ransom is paid
Cyber risks will also see businesses are also paying for cyber liability insurance. Businesses want to know they can be covered for liability should they ever experience a breach in their systems
Most people understandably think of cybersecurity is an IT problem, it’s not. It encompasses many facets of a business including legal, financial, physical security and data protection as well as IT. For cybersecurity measures to be successful changes in business culture needs to occur. Traditional risk management strategies do not provide visibility into all the different risks surrounding a cyber or digital risk; to be successful at managing digital risk all the different departmental componants need to collaborate.