With the alarming increase in cyberattacks across the globe, it is becoming evident that no organization is immune to cyberthreats. As a result, there is a question pending in the minds of IT security leaders: What happens to their organization in case of a cyberattack?
Any strategy can either be proactive or reactive. In terms of cybersecurity, most organizations are well-prepared with their proactive strategy, which often includes adopting the latest cybersecurity technologies and ensuring good cyber hygiene. But, the reactive part of this is rarely considered. The optimism bias leads IT security teams to assume that, unlike others, their organization might just be immune to cyberattacks. However, time and again, statistics have proven otherwise. It is estimated that 64% of companies have experienced at least one type of cyberattack.
As important as it is to deploy the latest cybersecurity solutions, it is equally necessary for organizations to be wary and prepared with a response strategy in case of a cyberattack.
Cyber insurance: An overview
Cyber liability insurance, also known as cyber insurance, is an insurance policy that organizations purchase to protect themselves from the financial damage that is caused by cyberattacks. It helps reduce the impact of business disruptions from a cyberattack, focusing on the financial aspects of the recovery. Cyber liability insurance helps cover various costs an organization might confront due to an cyberattack, like expenses associated with data recovery, legal assistance, and client refunds.
Cyber insurance is most often offered on a subscription basis. In terms of coverage, cyber insurance policies are mainly of two types: first-party coverage and third-party coverage.
- In first-party coverage, losses that directly impact the business alone are covered. For instance, when a cyberattack occurs on the client’s own network, the costs involved with restoring operations in terms of data recovery, business continuity, etc. are addressed under first-party coverage.
- In third-party coverage, when a cyberattack happens, the losses suffered by third-party clients are also covered by the insurance provider. For instance, if one of the client’s customers decides to sue them for negligence, those legal costs are addressed under third-party coverage.
Additionally, it is important to note that the specifics of what may or may not be covered by a particular type of cyber insurance will vary by insurance provider. It is crucial to properly research the details before selecting a cyber insurance policy.
The skyrocketing price of cyber insurance premiums
In many ways, cyber insurance policies work like many health insurance policies. In some geographies, health insurers might charge a premium for covering older people, and they might even be denied insurance if they have critical pre-existing health concerns. The odds of health failure or other serious health challenges are higher and often impact the insurance redemption rates of older people. To be safe, the insurance provider might choose not to cover them.
With the alarming increase in the number of cyberattacks, an increasing number of businesses are purchasing cyber insurance policies. As a result, cyber insurance providers have to deal with frequent reimbursements. To combat the same, cyber insurers are raising their premium costs and reducing the payout amounts.
At the same time, as cyber risks keep increasing, cyber insurance providers are also becoming more selective about the organizations they choose to cover. Before undertaking a client, they perform a thorough investigation to study and analyze their security posture and assign the client a risk score that indicates the organization’s level of exposure to cyber risks and how prone they are to vulnerabilities. Organizations with higher risk scores are charged hefty premiums and might even be denied insurance. If an organization’s cybersecurity landscape is good and it has proactive security measures in place, its score will be low in terms of risk and it can obtain better cyber insurance coverage at a lower premium.
Maintaining a low-risk score
To obtain cyber insurance at a lower cost, organizations need to maintain a low risk score. The idea behind this is simple: The cyber risk of each client is a key factor used by the cyber insurance provider to determine the premium cost. Therefore, insurance providers extend higher insurance coverage to resilient clients who are well-prepared for cyberattacks. To achieve a low-risk score, organizations need to have certain IAM capabilities in place. Deploying these basic security controls strengthens anorganization’s defenses against cyberattacks and ensure it is approved by the cyber insurance provider for a lower premium cost.
We’ve put together a checklist of seven must-have IAM features to help you secure your organization from cyberthreats, and achieve a low-risk score that helps you reduce cyber insurance expenses.
You can watch this webinar to decode the checklist and get cyber insured.