Thinking about a Cyber Insurance policy for your organisation? Here’s some quick points to consider:

In today’s business landscape, the threat of a cyber attack is ever-present. For businesses, the question is not if they will be targeted, but when. As cyber threats evolve, so must the strategies to protect against them. One crucial component of a robust cybersecurity strategy is cyber insurance. However, there are common misconceptions about cyber insurance that need to be dispelled. This article will explore the benefits of cyber insurance, debunk some of the myths, and emphasise the importance of a collaborative approach to cybersecurity within organisations.

But Insurance Companies never pay up, right?

Myth: A common misconception is that insurance companies are reluctant to pay claims after a cyber incident. While there are cases of disputed claims, these are often due to misunderstandings about the policy terms or failure to meet security requirements. A report by Aon found that 95% of cyber insurance claims were paid out in 2022 . Additionally, the UK Cyber Security Breaches Survey 2023 reported that companies with cyber insurance felt more confident about their ability to recover from a breach.

Cyber Insurance: So what are the benefits?

1. Financial Protection: Cyber insurance provides financial coverage in the event of a cyber incident. This can include costs related to data breaches, such as legal fees, notification costs, and business interruption losses. According to the 2023 Cost of a Data Breach Report by IBM and the Ponemon Institute, the average cost of a cyber breach in the UK is approximately £3.36 million (this includes various expenses, including detection and escalation, notification, post-breach response, and lost business costs). Having a cyber insurance policy can help mitigate these financial impacts, and ensure that a business can recover without facing crippling expenses.

2. Managing the Risk: Insurance companies often require policyholders to implement certain security measures as a condition of coverage. This can include regular security assessments, employee training, and the use of specific technologies, or vendors. These requirements can enhance a company’s overall security posture, making it more resilient to attacks.

3. Expert Support: Many cyber insurance policies include access to a network of experts who can assist in the aftermath of a breach. This can include forensic investigators, legal advisors, and public relations professionals. Their expertise can help contain the damage, identify the cause of the breach, and guide the organisation through recovery. One thing to be mindful of, is that recovery is not an overnight process, it will take time, but the support is there.

Business Wide Approach:

Cybersecurity is not just an IT/Security issue; it’s a business-wide concern. A breach can impact every aspect of an organisation, from daily operations to reputation. Therefore, it’s essential for companies to adopt a collaborative approach that involves both the IT/Security teams and senior management.

1. Leadership Involvement: When senior management understands and supports cybersecurity initiatives, it sets a tone that prioritises security throughout the organisation. Leaders can allocate resources, support policy enforcement, and ensure that cybersecurity is integrated into the overall business strategy.

2. Cross-Department Collaboration: Cybersecurity is most effective when it involves multiple departments. For example, the HR department can help implement training programmes to educate employees about phishing attacks, while the legal team can ensure compliance with data protection regulations. By working together, departments can create a more cohesive and comprehensive security strategy that helps the whole business.

3. Communication: Regular (jargon free) meetings between the IT/Security teams and senior management can help keep everyone informed about the current threat landscape, recent incidents, and ongoing initiatives. This transparency can foster a culture of security awareness and prompt proactive measures to address vulnerabilities. Adopting this approach before any breach will really help in the event of an attack.

Can it help provide a competitive advantage?

Investing in cyber insurance and adopting a whole-team approach to cybersecurity can provide significant competitive advantages.

1. Customer Trust: Customers are increasingly concerned about how their data is handled. Demonstrating a commitment to cybersecurity can enhance customer trust and loyalty. A PwC survey found that 85% of consumers will not do business with a company if they have concerns about its security practices .

2. Operational Resilience: A well-prepared company can recover more quickly from a cyber incident, reducing downtime and maintaining business continuity. This resilience can be a key differentiator in the market, and potentially provide a competitive edge.

We insure other valuable assets, so why not cyber?

Much like car insurance or life insurance, cyber insurance is a safeguard against unforeseen events. We don’t purchase car insurance with the expectation of having an accident, but we recognise the importance of being prepared. Similarly, businesses should view cyber insurance as a crucial part of their risk management strategy. It’s not a matter of expecting to be breached, but being prepared for the possibility.

References:

1. IBM, Ponemon Institute. (2023). Cost of a Data Breach Report.
2. IBM, Ponemon Institute. (2023). Cost of a Data Breach Report: United States.
3. Aon. (2023). Cyber Insurance Market Insights Report.
4. UK Government. (2023). Cyber Security Breaches Survey 2023.
5. PwC. (2021). Consumer Intelligence Series: Protect.me.