Cyber risk insurance is a combination of two concepts rather than a product.
Almost everyone would agree that businesses and other organizations face cyber risks. You can’t read a newspaper or magazine, watch the national news, or listen to the radio without learning about the latest cyber security breach. The problem is global and it is spreading.
The losses, which now far exceed the world’s illegal drug trade, can be catastrophic for organizations that experience a security incident. Database hackers, for example, can steal personally identifiable information (PII) from customers and make it available to criminal gangs and identity thieves. They, in turn, can sell the confidential information on the streets. Criminals can then open charge accounts, make illicit purchases, gain access to private bank records, or possibly do worse. The targeted business may face liability lawsuits, lost business, damaged reputation, and in some cases, government fines.
The bad news keeps coming. Information security breaches are becoming more sophisticated and numerous. The police can’t help and are way behind the curve. Malicious cybercriminals risk very little when they carry out their illegal activities. They can reap great rewards.
Get ready, though, because things are going to get worse. The number of Internet addresses that can be assigned has expanded dramatically. The original Internet addressing scheme (IPV4) provided approximately 4.2 billion (or 4.2 billion unique endpoints). The newer framework (IPV6) will provide one trillion, trillion addresses or (340,282,366,920,938,000,000,000,000,000,000,000,000).
That’s a lot of Internet addresses!
Computing devices and other digital signal processors, all with Internet access, can be placed virtually anywhere, such as appliances or machines on the production floor. Every address is subject to malicious cracking. The rush is to do it. That reality spells real trouble.
What can an organization do?
A company or other organization must adopt cyber risk insurance as a business process. Doing so would immediately provide protection against potential loss and damage due to a cyberattack to an organization’s information infrastructure (records, networks, and costs associated with the consequences of a computer security breach).
The adoption of cyber risk insurance practices merges two important concepts. The first involves implementing what are known as “security best practices” across the enterprise. Experts typically explain this dimension as “providing regular IT security training” for everyone in the company. The second aspect of cyber risk insurance involves the company transferring any potential financial loss into a relatively new product called “cyber risk insurance.”
Fusing industry-standard security best practices with a custom-designed cyber risk insurance policy can provide a business with the best possible scenario against growing cyber threats.
Experts know that perfect information security is impossible. But a company or other organization can improve the chance of preventing a successful attack by following a systematic process designed to block intrusion attempts. Cyber risk insurance can help offset any financial loss that may “get through” the organization’s security plan.
Are you prepared for the consequences of a successful cyberattack? Would you be able to prove in court that you practiced due diligence and were not negligent? If you cannot answer yes to both questions, you are at risk.
