Companies' cyber risk decreases with increasing insurance coverage, assert researchers
Cyber Insurance: A Crucial Shield Against Digital Threats
Cyber insurance is proving to be a vital tool for businesses in the face of escalating digital threats. According to reports from At-Bay, Omdia, and Forrester, cyber insurance plays a crucial role in detecting, responding to, and recovering from data breaches and malicious cyberattacks.
The insurance coverage offers a comprehensive safety net, providing financial resources and expert services to manage the aftermath of a breach effectively. It covers investigation costs, data recovery, system restoration, legal fees, notification requirements, business interruption losses, and reputational repair efforts.
Specifically, cyber insurance typically includes detection and investigation support, response and containment, recovery, legal and regulatory coverage, and additional protections such as credit monitoring, ransom payments, and public relations services.
Reports emphasize that while many organizations underestimate cyber risks, having proactive cyber insurance helps bridge significant coverage gaps and ensures readiness before an attack. Coverage is seen as essential given the high and rising costs of data breaches, with averages ranging from millions to tens of millions of dollars per incident.
Moreover, customized cyber insurance aligned with a company’s specific risks and regulatory environment enhances resilience, enabling faster detection and coordination of expert response services tailored to the organization’s sector and threat landscape.
The Omdia report, based on a survey of over 400 security decision makers across companies in the U.S., Canada, U.K., France, and Germany, highlights that nearly 1 in 4 enterprise security decision makers consider obtaining insurance over the next 12 months a key strategic priority. A separate survey from Forrester, based on responses from 1,620 global security professionals in 2023, shows that more than 7 in 10 respondents view cyber coverage as important or critical to their company.
Insurance companies often work with a panel of service providers to help with investigations and recovery. Companies with cyber insurance are more likely to detect, respond, and recover from data breaches and malicious attacks, as highlighted in these reports.
In the wake of high-profile incidents like the ransomware attack against Change Healthcare in February, which is expected to result in insured losses of $1 billion, and the July IT outage impacting 8.5 million Microsoft Windows devices linked to a defective CrowdStrike software upgrade, the importance of cyber insurance in mitigating against data breaches, malicious attacks, and maintaining business continuity cannot be overstated.
Disclosure: Omdia and Cybersecurity Dive are both owned by Informa, with Omdia having no influence over Cybersecurity Dive's coverage.
- Cyber insurance, in the face of digital threats, plays a crucial role in incident response, particularly involving data breaches and malicious cyberattacks, offering financial resources and expert services to manage the aftermath effectively.
- A key component of cyber insurance includes coverage for ransom payments, ensuring businesses are equipped to handle ransomware attacks, as highlighted by the significant insured losses from the Change Healthcare ransomware attack.
- For businesses, cyber insurance serves as a crucial shield against potential data breaches, malicious attacks, and subsequent financial losses, with over 7 in 10 global security professionals viewing cyber coverage as important or critical to their company's resilience.
