Cyber Risk Mitigation
As individuals, businesses and governments rely heavily on digital connectivity, Cyber Security becomes an important goal for all organizations and individuals to operate seamlessly.
Regrettably only financial losses are recovered as of today with Cyber Insurance after a cyber-attack.
Cyber Insurance has become one of the basic thresholds for Risk Management that is required for the entire business system.
Cyber insurance has grown exponentially as the number of cyber threats and data breaches have increase worldwide.
In fact, the cyber insurance market is expected to grow from $ 7.8 billion in 2020 to $ 20.4 billion by 2025, with an annual growth rate of 21.2%.
The dynamic nature of digital risk has made Risk Management difficult.
Businesses have started transferring most of their online risks to third-party organizations without a direct method of assessing financial exposure and Risk Mitigation.
Insurers struggle to assess and evaluate the risks, and this has led to an increase in premium costs and deductions, reduced coverage, and unsustainable direct loss ratios.
The Insurance industry will only be able to support a growing market demand is through trust and transparency based on Risk Assessment with sound data science principles.
Today, cybercriminals run franchises to evaluate their target organization and ensure that their demands are met by Cyber Insurance.
To reduce losses, the average price of Cyber Insurance policies has increased by 5 percent from 2019 to 2020 and now we are seeing a premium increase of more than 100-200 percent after 2020. This is a result of an increase in the direct loss ratio for stand-alone cyber coverage from 47 percent in 2019 to 73 percent in 2020, which has been the highest level of coverage recorded since cyber data has been included in financial reporting.
To minimize losses, insurance companies are now becoming sharper in their underwriting.
In 2021, seven prominent cyber insurers teamed up to pool their expertise to improve industry-wide cyber risk mitigation efforts.
Cyber Insurer are promoting the adoption of effective Risk Management strategies.
There are instances of risk mitigation cost benefits to businesses that proactively mitigate vulnerabilities.
Insurers are also specifically outlining security strategies for organization to minimize the risk.
The only challenge across all variables is the lack of a standardized metric to measure cyber risks for the business.
Each insurance carrier words their cyber policy differently with their unique way for determining the premium.
While it is important to be flexible in the face of emerging threats, this approach keeps businesses one step back.
Organizations need to understand their enterprise-wide cybersecurity risk posture to maintain data-driven control.
By continuously mapping risks across people, processes, technology, and third parties against globally accepted frameworks and CVSS/CVE* standards, real -time threats and vulnerabilities can be generated.
Business leaders and security teams need to deploy data backed cyber risk quantification platforms to measure, manage, and mitigate risk.
CVSS – The common Vulnerability Scoring System is free and open industry standard for assessing the severity of computer system security vulnerability
CVE – Common Vulnerabilities and Exposures is a list of publicly disclosed computer security flaws.