The Cost of Operating Without Cyber Insurance

With one high-profile attack after the next making headlines in recent years, it’s clear we won’t see a decrease in cyber-threats any time soon. In fact, ransomware attacks are appearing to have a resurgence in 2023, while phishing attacks increased by 61% last year and are only expected to rise.

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…which brings us to our next topic.

Is cyber insurance worth it?

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 while denials and claims are simultaneously rising. The rising costs have organizations asking “is cyber insurance worth it?” Though the costs of cyber insurance are becoming increasingly expensive for both insurer and the insured, doing nothing to prepare has far-reaching implications.

How expensive are we talking?

If your organization is in the United States, a breach will likely cost you twice the global average, according to IBM’s annual “Cost of a Data Breach” report. While the average cost of a data breach in the United States is $9.44M, the average jumps to $10.10M if you’re in the healthcare industry. The most financially damaging vector tends to be stolen or compromised credentials, which takes longer to contain and ends up costing about $150,000 more than other types of data breaches like phishing, business email compromise, 3^rd party vulnerabilities, or insider threats.

Financial losses incurred by a cyber incident are not limited to lost sales; rather, they are often the result of operational downtime, the downstream effects of a tainted reputation, ransomware payments, or the financial penalties sustained by compliance violations. Unfortunately, small to midsized businesses often cannot recover from such damaging incidents, rendering protection even more important.

What to do? Start with the basics

Preparedness is the central factor when it comes to both securing cyber insurance as well as bolstering your resilience against cyberattacks in general. Improving basic security fundamentals can lead to significant and immediate improvements. There are a few elements of a comprehensive cybersecurity program that not only increase the chances your organization can secure cyber insurance coverage, but also protects your organization from threat actors.

Build your plan

To begin, start with a risk assessment (both quick and in-depth versions exist), that determines your organization’s current security posture. This assessment will identify any areas of improvement to inform a plan that bolsters your cybersecurity. The subsequent plan should be prioritized according to the greatest areas of risk, resources, and budgets. Ideally, the plan will cover detection and response, policies and training, and assessments and testing, and be designed to evolve and grow with your organization.

See where you stand

With the help of a Cyber Insurance Readiness Checklist, your organization will be well on its way to preparedness. The cyber insurance market is rapidly changing, and requirements for obtaining coverage are becoming increasingly stringent. By first identifying the current state of your cybersecurity posture, you’ll have a better understanding of where you stand, what needs work, and how cyber insurance providers will see your organization in their eyes, ultimately upping your changes of securing coverage and reducing premiums.

Is your organization considering cyber insurance? Review our cyber insurance readiness checklist first to see how you measure up to insurance coverage requirements.

Get specific

Once the foundation is in place, look for coverage that best fits your organization’s needs. Not all cyber insurance plans are created equal, so ensure potential coverage matches your requirements.

Keep it up

Unfortunately, the job isn’t complete once you’ve secured coverage. Rather, it’s important to:

• Keep up the level of protection with continuous comprehensive cybersecurity – as threat actors continue to grow and evolve, we must too.
• Update your security plans and policies as needed, training new employees, educating your IT team on evolving threats, and adhering to the recommended cadences of regular scans of your website, passwords, networks, and endpoints.
• Consider solutions that deploy automated scans and contain attacks on your behalf, especially if you don’t have a SOC of your own.
• Maintain your cybersecurity posture to ensure you can keep your coverage, as providers want to ensure your organization is continuing to prioritize cybersecurity.

Related Resources:

Blog: Why You Could Be Denied Cyber Insurance Policy Coverage
Blog: Getting Cyber Insurance Policy Coverage: Where to Start

Looking to increase your peace of mind and decrease financial risk? The Defendify Cybersecurity Service Warranty might be right for your organization.