Breaking Down Cyber Insurance Basics

April 3, 2023

It’s no surprise to those seeing the constant influx of data breach disclosures that cybercrime is more rampant and widespread than ever. According to the Cybersecurity Ventures 2021 Cybercrime Report, "The economic impact of cybercrime is significant, with the global cost of cybercrime estimated to reach $10.5 trillion annually by 2025." This cost includes direct financial losses—like theft of funds or intellectual property—as well as indirect costs, such as damage to brand reputation, lost productivity, and the cost of recovering from a cyberattack. With the trillion-dollar costs of cybercrime anticipated in just two years, it is important for everyone from the C-Suite to the SOC to be aware of cyber insurance protection options.

 

Cyber insurance is a relatively new form of insurance that provides financial protection against losses incurred from cyberattacks, data breaches, and other cyber incidents. This blog post is intended for anyone interested in learning more about cyber insurance, from IT professionals to executives. It explores what is covered under cyber insurance and provides valuable insights on how to implement it correctly.

 

Most cyber insurance policies at least provide coverage for the following types of risks but not limited to:

 

  • Data Breaches
    • Data breaches involve the unauthorized access, theft, or disclosure of sensitive data, such as personal or financial information.
    • Cyber insurance policies typically cover the costs associated with responding to a data breach, including forensic investigations, notification of affected individuals, credit monitoring, and public relations.

  • Cyber Extortion
    • When a malicious adversary threatens to release or destroy data unless a ransom is paid, this is called cyber extortion.
    • Cyber insurance policies can cover the costs associated with responding to cyber extortion, including ransom payments and negotiations.

  • Network Interruptions
    • Problems such as system failures, power outages, or cyberattacks might cause network interruptions.
    • Cyber insurance policies may cover the losses incurred as a result, including loss of income, extra expenses, and business interruption.

  • Cyberattacks
    • Cyberattacks involve the use of malware, viruses, or other methods to disrupt or damage computer systems or steal data.
    • Cyber insurance policies can provide coverage for the costs associated with responding to cyberattacks, including remediation, legal fees, and public relations.

  • Cyber Liability
    • Legal liabilities resulting from a cyber incident, such as allegations of negligence or violations of data protection laws, are known as cyber liability.
    • Cyber insurance can cover the costs associated with defending against legal claims, as well as any damages or fines that may be imposed.

  • Social Engineering
    • Social engineering is a deceptive tactic used to manipulate individuals into divulging sensitive information to a threat actor or performing actions that are harmful to the organization.
    • Cyber insurance policies may cover the losses resulting from social engineering attacks, such as fraudulent wire transfers or other financial transactions.

 

Cyber insurance can also provide access to expert assistance, such as forensic IT services, legal advice, and public relations support. This is particularly valuable in the event of a data breach or cyberattack, where expert support can help mitigate the damage.

 

To implement cyber insurance correctly, several key factors should be considered:

 

  • The Risks
    • Before purchasing cyber insurance, it is essential to understand the risks that your business or organization faces. This involves identifying the data that needs protection and the vulnerabilities in your network that cyber criminals could exploit. Once these risks are understood, your cyber insurance policy can be tailored to meet your specific needs.

  • The Right Coverage
    • Several types of cyber insurance policies are available, and it is crucial to select one that best meets your needs. Some policies only cover specific cyber risks, such as data breaches or cyber extortion, while others provide more comprehensive coverage.

  • The Experienced Broker
    • Choosing the right cyber insurance policy can be complex, so it is important to work with an experienced broker who guides you through the process. A broker helps you understand the different policy options available and ensures that you get the coverage that you need.

  • The Good Plan
    • Cyber insurance should be seen as part of your overall cybersecurity strategy. This involves developing a comprehensive cybersecurity plan that includes measures to prevent cyberattacks, such as employee training and software updates. By implementing these measures, you can reduce the likelihood of a cyberattack and make your business or organization a less attractive target for cybercriminals.

  • Repeat 🔁
    • Cyber risks are constantly evolving, so it is necessary to regularly review and update your cyber insurance policy to ensure that it remains relevant. Assess your cybersecurity risks on a regular basis and adjust your policy accordingly.

 

 

How Does Optiv Help?

The bottom line is that cybersecurity has become a critical factor in today's digital economy, with a significant impact on businesses and individuals. The economic cost of cybercrime is substantial, including direct financial losses, legal and regulatory penalties, and broader economic implications. As such, businesses and individuals must take steps to protect themselves against cyber risks, including implementing strong cybersecurity measures and investing in cyber insurance.

 

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Figure 1 – Optiv's Cyber Insurance Support

 

If you are interested in learning more about cyber insurance and which coverage options might be best for your organization, Optiv is here to help. Read more about our offerings and reach out to a cyber insurance expert on our website: https://www.optiv.com/solutions/cyber-insurance

By:
Preet Patel
Consultant II | Optiv
Preet Patel is a seasoned professional with over five years of comprehensive experience in the domains of application and penetration testing. He has worked with a diverse range of industries, including the banking sector and Fortune 500 corporations, where he has developed and honed his skills. As a subject matter expert (SME), Preet possesses extensive expertise in designing and implementing phishing campaigns, conducting network and physical security assessments, and integrating IoT devices into variable assessments. He excels in various areas of specialization, including but not limited to Penetration Testing, Network Security, Read Team Exercises, Web Application Testing, Web and Interactive Design, and Project Management. Fun Fact: Preet is also a licensed pilot.

Optiv Security: Secure greatness.®

Optiv is the cyber advisory and solutions leader, delivering strategic and technical expertise to nearly 6,000 companies across every major industry. We partner with organizations to advise, deploy and operate complete cybersecurity programs from strategy and managed security services to risk, integration and technology solutions. With clients at the center of our unmatched ecosystem of people, products, partners and programs, we accelerate business progress like no other company can. At Optiv, we manage cyber risk so you can secure your full potential. For more information, visit www.optiv.com.

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