3 steps you can take to manage cyber risk

Manage cyber risk

Manage cyber risk

Internet usage continues to rise across the globe. Along with this, comes an increase in cyber-crime, which according to a report by Mcafee, is estimated to have cost the global economy USD$445 billion in 2013 . In Australia, the cost is estimated at 0.08% of GDP per year, or approximately AUD$1.28 billion. The Mcafee report attributes this partly to the fact that, ‘Cybercrime produces high returns at low risk and (relatively) low cost for the hackers.’

In addition to taking out cyber insurance, businesses can proactively mitigate the cyber risk and a cyber-attack by undertaking a range of measures including:

  • Implementing business-wide cyber-risk management
  • Seeking external specialist advice
  • Identifying the type of data that needs to be secured

Don’t just leave Cyber Risk to IT

Cyber-risk management should not only be considered the domain of the IT department. It affects the entire business and from the board down, the business needs to think about how to manage that risk and how to develop contingency plans if something does go wrong.

Seek external specialist advice
The increasing variety and sophistication of cyber-crimes mean that independent specialist external advice on securing systems is essential for businesses. It is very rare that a business will have sufficient internal resources to address this problem fully both prior to and certainly following the loss.

Identify the type of data that needs to be secure
Firms should conduct an audit of their network to ensure sensitive records have an appropriate level of security. Companies in the business of dealing with sensitive financial that hold personal information including name, address, date of birth – the very kind of data that could be the target of an attack.

 

Cyber Insurance

Allianz currently offers cyber insurance for the top end of the market through AGCS and we are working on the release of a cyber insurance product tailored specifically to the needs of SME customers. We expect to make it available to the market by the end of the year.
1 Reference

Source allianzinsight.com.au

Speak to one of Insure 247’s brokers on 1300 046 787

Please note Cyberliabilitycomparison.com.au Insurance News is an information service sometimes provided by third parties Insure 247 Australia doesn’t warrant the accuracy of any information contained therein, readers should make their own inquiry’s before relying on information in the stories Terms of Service

Cyber Insurance Comparison

Please note that any advice given has been provided without taking into account your objectives, financial situation or needs. It is also based on information we have obtained from you. You must ensure the information is accurate and complete. Otherwise, this advice may be based on the inaccurate or incomplete information. You should consider whether the advice is appropriate in light of your objectives, financial situation, and needs

Cyber Risk

 

Businesses must prepare for new generation of cyber risks

Prepare for a new generation of cyber risks

Businesses must prepare for a new generation of cyber risks which are fast evolving, moving beyond the established threats of data breaches, privacy issues and reputational damage to operational damage, business interruption and even potentially catastrophic losses.

In a new report – A Guide to Cyber Risk: Managing The Impact of Increasing Interconnectivity – specialist insurer Allianz Global Corporate & Specialty (AGCS) examines the latest trends in cyber risk and emerging perils around the globe. Cyber risk is a major and fast-increasing threat to businesses with cyber-crime alone costing the global economy approximately $445 billion a year, with the world’s largest 10 economies accounting for half this total. In Australia, cyber risk is estimated to cost the economy 0.08% of GDP per year, or approximately $1.3 billion.

“As recently as 15 years ago, cyber-attacks were fairly rudimentary and typically the work of hacktivists, but with increasing interconnectivity, globalization and the commercialization of cyber-crime there has been an explosion in both frequency and severity of cyber-attacks,” says AGCS CEO Chris Fischer Hirs.

“Cyber insurance is no replacement for robust IT security but it creates a second line of defence to mitigate cyber incidents. AGCS is seeing increasing demand for these services, and we are committed to working with our clients to better understand and respond to growing cyber risk exposures.”

Tougher regulatory regimes and new cyber perils

Increasing awareness of cyber exposures as well as regulatory change will propel the future rapid growth of cyber insurance. With fewer than 10% of companies currently purchasing cyber-specific policies, AGCS forecasts that cyber insurance premiums will grow globally from $2 billion per annum today to over $20 billion over the next decade, a compound annual growth rate of over 20%.

“Growth in the US is already underway as data protection regulations help focus minds, while legislative developments and increasing levels of liability will see growth accelerate in the rest of the world,” says Nigel Pearson, who is globally responsible for cyber insurance at AGCS.

“In Australia, the Federal Government has stated that it will introduce a mandatory data breach notification scheme by the end of 2015 or in early 2016, which is expected to drive interest in cyber insurance. Regional AGCS CEO, Holger Schaefer, stated “we have already seen a significant increase in cyber insurance inquiries as boards of directors become more aware of their regulatory and operational exposures to cyber risk.”

Previously, attention has largely been focused on the threat of corporate data breaches and privacy concerns, but the new generation of cyber risk is more complex: future threats will come from intellectual property theft, cyber extortion and the impact of business interruption (BI) following a cyber-attack or from operational or technical failure; a risk which is often underestimated.

“Awareness of BI risks and insurance related to cyber and technology is increasing. Within the next five to 10 years BI will be seen as a key risk and a major element of the cyber insurance landscape,” says Georgi Pachov, cyber expert in AGCS’s global property underwriting team.

In the context of cyber and IT risks, BI cover can be very broad including business IT computer systems, but also extending to industrial control systems (ICS) used by energy companies or robots used in manufacturing.

Connectivity creates risk

Increasing interconnectivity of everyday devices and growing reliance on technology and real-time data at personal and corporate levels, known as the ‘Internet of Things’, creates further vulnerabilities. Some estimates suggest that a trillion devices could be connected by 2020, while it is also forecast that as many as 50 billion machines could be exchanging data daily. ICS are another area of concern as a number of these still in use today were designed before cyber security became a priority issue. An attack against an ICS could result in physical damage such as fire or explosion, as well as BI.

Catastrophic event

While there have been some very large data breaches, the prospect of a catastrophic loss is becoming more likely, but exactly what it will look like is difficult to predict. Scenarios include a successful attack on the core infrastructure of the internet, a major data breach or a network outage for a cloud service provider, while a major cyber-attack involving an energy or utility company could result in significant outage of services, physical damage or even loss of life in future.

Stand-alone cover

Allianz also predicts that the scope of cyber insurance must evolve to provide broader and deeper coverage, addressing business interruption and closing gaps between traditional coverage and cyber policies. While cyber exclusions in property and casualty policies are likely to become commonplace, standalone cyber insurance will continue to evolve as the main source of comprehensive cover. There is growing interest among the telecommunications, retail, energy, utilities and transport sectors, as well as from financial institutions.

Education – both in terms of businesses’ understanding of exposures and underwriting knowledge – must improve if insurers are to meet growing demand. In addition, as with any other emerging risk, insurers also face challenges around pricing, untested policy wordings, modelling and risk accumulation.

Responding to cyber risk

The AGCS report highlights steps companies can take to address cyber risk. Insurance can only be part of the solution, with a comprehensive risk management approach being the foundation for cyber defence.

“Once you have purchased cyber insurance it does not mean that you can ignore IT security. The technological, operational and insurance aspects of risk management go hand in hand,” explains Max Broodryk, expert for cyber at AGCS Pacific.

Cyber risk management is too complex to be the preserve of a single individual or department, so AGCS recommends a ‘think-tank’ approach to tackling risk whereby different stakeholders from across the business collaborate to share knowledge.

In this way, different perspectives can be challenged and alternative scenarios considered: for example, these might include the risks posed by corporate developments such as mergers and acquisitions or by the use of cloud-based or outsourced services. In addition, cross-company involvement is essential to identify key assets at risk and, most importantly, to develop and test robust crisis response plans.

For more information and to download the full report please go here.

Source Allianz

[pardot-form id=”489″ title=”Cyber Insurance”]