While we are most always aware of large cyber attacks and/or data breaches such as the 2013 Target breach or the 2014 Home Depot breach, we often forget that attacks happen on a daily basis; big and small. The following webpage displays a real time look at live attacks occurring all around the world. According to a 2015 Allianz survey, of more than 500 risk managers and insurance experts, business interruption and supply chain risks is the top concern with cybercrime coming in at number five. The same survey lists primary risks for the next five years and the responses were flipped with cybercrime being the highest rated risk and business interruption and supply chain risks being the fifth highest rated risk.
What Are Insurers Doing to Assist Companies in Mitigating These Risks?
Both AIG and The Hanover recently reported offering Property Damage coverage for cyber attacks. AIG said they will offer coverage limits of up to $100 million for property damage and $100 million for bodily injury related to cyber attacks. The market is predicted to grow to $10 billion in annual premiums by 2020, up from about $2 billion in 2015. Hanover is launching a suite of cyber products designed to help small to mid-sized businesses mitigate their risks related to cyber attacks.
Due to the increase of commerce through the internet, businesses have an increased risk of cyber attacks affecting their bottom line. Cyber attacks can cripple networks and expose vulnerabilities in your security systems, open your customer list and release customer sensitive data or redirect web traffic to a spoofed site. All of these attacks can be detrimental to your business operations, brand and bottom line. With over 900 million reported records exposed in 2014 (2015 list found here), more companies are considering transferring risks to Insurers. According to ABI Research, less than twenty percent of large enterprises have purchased cyber insurance and less than six percent of small to medium sized companies have transferred their risks.
How Can Companies Respond?
- Perform an assessment to understand potential risks to your business. What would be the costs associated with a breach? Reputational costs, loss of business income and out of pocket expenses to mitigate and repair the breach are just a few.
- Understand gaps in your current coverages and determine if you off load those risks by purchasing insurance or self-insure.