With one high-profile attack after the next making headlines in recent years, it’s clear we won’t see a decrease in threats any time soon. The uptick in cyber threats has organizations asking, “is cyber insurance worth the cost?” The quick answer — yes!
Operating without cyber insurance leaves an organization open to the world of evolving threats and all the ripple effects of a cyberattack.
- Is cyber insurance worth the cost?” The quick answer — yes!
- Cyber threats are increasing and a cyberattack can happen to a company of any size.
- The costs of cyber insurance are becoming increasingly expensive for both insurer and the insured, doing nothing to prepare has far-reaching implications.
- Preparedness is the central factor in the effectiveness of both cyber insurance and resilience against cyberattacks.
A Cost-Benefit Analysis of Cyber Insurance
In 2021, cybersecurity authorities observed increased sophisticated, high-impact ransomware incidents against critical infrastructure organizations globally. Organizations questioning if cyber insurance is worth the cost might assume that a cyber breach will cost less than adding additional cybersecurity protection. But, they may not be considering the various repercussions that a cyberattack could cost their business. In addition to the ransom itself, the cost of a ransomware attack can include:
- Operational downtime
- Investigation and remediation costs
- PR or crisis communication costs
- Reputational damage
- Lost business
- Organizations like MSPs and other IT Providers operating without cyber insurance can even invite legal action if something goes wrong.
The risk model for cyber insurance is quickly adjusting to align with the latest threat vectors, resulting in higher premiums and coverage reductions, along with scrutiny of risk profiles and detailed assessments.
Cybersecurity insurance requirements are becoming more stringent, and denials and claims are simultaneously rising. Still, though the costs of cyber insurance are becoming increasingly expensive for both insurer and the insured, doing nothing to prepare has far-reaching implications.
What Type of Organizations Need Cyber Insurance?
In simple terms, any organization — of any size — that uses the internet or computers can benefit from cyber insurance.
An organization is vulnerable to cyberattacks if it:
- Accepts payments online
- Accepts in-store credit card transactions
- Communicates with customers online or via voice over internet protocol (VoIP)
- Stores personal information electronically
- Transfers documents electronically
- Would be harmed from ransomware and a business interruption event
Cyber Insurance is like health, car, and home insurance in the way that you never want to rely on it, but the truth is that you need coverage for the unexpected.
Many businesses are looking to purchase cyber insurance to help mitigate risks and meet business demands. Some face the possibility of losing an existing or prospective client if their cybersecurity posture is not strong enough.
Cybersecurity Protection is Worth It
While cyber threats are increasing in volume, new research indicates that ransomware costs are being cut significantly due to better preparedness. With several sanctions and policy bans implemented in recent months, cyber insurance claims have declined since earlier in the year. Still, organizations that aren’t keeping pace with security needs are paying more per breach incident, and the true costs of operating without cybersecurity insurance are more apparent than ever.
Preparedness is the central factor in the effectiveness of both cyber insurance and resilience against cyberattacks. Improving basic security fundamentals can lead to significant and immediate improvements. There are steps that organizations can take to build a comprehensive cybersecurity program that not only increases the chances your organization can secure cyber insurance coverage but protects your overall business.
Start with a risk assessment that determines your organization’s current security posture. This assessment will expose any areas of improvement to inform a plan that bolsters your cybersecurity. The subsequent plan should be holistic and include testing and assessments, policies and training, and detection and response.
Once the foundation is in place, find the coverage that best fits your organization’s needs. Not all cyber insurance plans are created equal, so ensure potential coverage matches the needs of your business. The job isn’t complete once you’ve secured coverage. Keep up the level of protection with continuous comprehensive cybersecurity – as threat actors continue to grow and evolve, we must too.
With comprehensive risk assessments and actionable recommendations for improving posture, Defendify can help clients set themselves up for success when obtaining cyber insurance coverage.
Start with our Cyber Insurance Readiness Checklist to identify the current state of your cybersecurity posture and build the next steps to secure cyber insurance coverage.
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