Coping with the growing threat of cyber attacks
Cyber attacks are a major global menace and a growing issue for risk managers and insurers alike. Currently, the FBI is probing a hack of the New York Times, as well as other major U.S. media. This follows on hacks of U.S. government agencies, political organizations and is just another new front in cyber attacks. Expect the government to get more involved in fighting global cyber warfare.
Meanwhile, on the domestic front, businesses continue to be a major target of attacks. From data theft to business ransom attacks, hackers target commercial entities of all sizes and industry segments. And the cost of such attacks may be far greater than is immediately apparent. A recent Deloitte report focuses on Beneath the Surface of a cyber attack on business performance. The report notes:
"What does a cyberattack really cost? Regulatory fines, public relations costs, breach notification and protection costs, and other consequences of large-scale data breaches are well-understood. But the effects of a cyberattack can ripple for years, resulting in a wide range of “hidden” costs—many of which are intangible impacts tied to reputation damage, operational disruption or loss of proprietary information or other strategic assets."
The report focuses on 14 business impacts: 7 that are most apparent and 7 that are less visible - see the infographic below, or this list:
Above the surface, or better-known cyber incident costs
- Customer breach notifications
- Post-breach customer protection
- Regulatory compliance (fines)
- Public relations/crises communications
- Attorney fees and litigation
- Cybersecurity improvements
- Technical investigations
Below the surface, or hidden, less visible costs
- Insurance premium increases
- Increased cost to raise debt
- Operational disruption
- Lost value of customer relationships
- Value of lost contract revenue
- Devaluation of trade name
- Loss of intellectual property (IP)
More and more businesses turn to insurance for some protection against such costs, but the available cyber insurance products are still in flux:
"With cyber insurance premiums expected to grow from around $2 billion in 2015 to an estimated $20 billion or more by 2025, insurers and reinsurers are continuing to work out underwriting requirements, and the market can be characterized as “volatile,” according to industry observers with expertise in the area."
Despite the volatility, it is critical that agents stay current on products and services available for businesses and individuals alike. Here are some helpful resources: