As the complexities and diverse risk profiles for protecting business IT security increase, cyber insurance coverage is becoming harder to obtain. Before IT security became as important as it is now, cyber insurance wasn’t something that many organizations thought much about. If they did feel a need for it, it could often be easily bought. This is no longer the case.
Why is Cyber Insurance Becoming Difficult?
Today, due to the enormous increase in the number, diversity, and frequency of digital breaches against businesses, insurance providers are starting to realize just how difficult IT security can be. Consider the following:
- Data Breaches are Increasing: It’s well known that hackers are becoming smarter and finding more ways to hack into companies’ networks. For example, a survey report by Thought Lab Group found that between 2020 and 2021 the number of data breaches against organizations increased by 20% or more.
- Businesses Don’t Have Strong Protection: Another worrying statistic is that roughly 41% of organization executives don’t consider their cybersecurity modern and current enough for strong protection. Many businesses don’t prioritize this protection in their company budget, leaving them with mediocre coverage that isn’t properly monitored.
- Number of Financial Losses: In 2021 and 2022, losses from IT theft and hacking in one form or another averaged out at about $200,000 per breach. Many of these breaches also caused their victims to go out of business within 6 months.
- Ransomware is Worsening: The growing threat of ransomware is now more pervasive than ever. In 2021 and early 2022, hackers launched ransomware attacks against targets an average of once every 11 seconds. That amounts to just over 3.1 million ransom attempts per year, with an average payout of $118,000 per successful attempt. With these numbers, your company is highly likely to be a victim.
Viewing these statistics and figures, it’s easy to understand why an insurance firm might be leery of agreeing to cover anyone’s cyber assets. Insurance is heavily dependent on actuarial risk calculations for assessing disasters. The cybersecurity landscape is evolving much too quickly for these to easily be formulated for many organizations.
Why Your Organization Needs Cyber Insurance
Despite the difficulty of obtaining insurance, the bottom line is that your company or organization needs to protect itself against worst-case losses. Even if you’re a small business owner, your IT assets can be just as important as physical business property. Because of these factors, you should insure valuable digital property, just as you’d absolutely make sure to insure physical assets.
No matter how well you secure your business, there is no way to 100% guarantee that you won’t suffer a major financial loss because of a breach. Insurance can protect you against being burned too badly by a worst-case scenario.
What You Can Do to Obtain Practical and Financial Cyber Protection
The insurance industry isn’t rejecting cyber insurance as a business model. Far from it, since the demand for this type of disaster protection is simply too large and growing too fast to not be serviced. What insurance providers are doing, however, is carefully screening organizations for approval based on risk profile.
In other words, if you want cyber insurance, you must be able to demonstrate that you’ve minimized your IT risks as much as possible against a variety of threats. On the one hand, these threat minimization measures will include relatively essential things like firmly backing up your data and crucial services offsite in case of a natural disaster or some physical catastrophe. This is the easier part of the IT protection job.
More difficult will be convincing an insurance provider that you’re firmly compliant with their requirements for protection against data breaches and hacks. Some of the compliance needs they stipulate could include things like:
- Multi-factor authentication measures for data access
- Regular risk assessments of IT networks and access points
- IT security awareness training
- Dedicated 24×7 monitoring, alert, and response systems for cyber threats
- Provable special restrictions on how data is accessed and how information is shared
Consider obtaining the help of an experienced and dedicated third-party IT services provider such as Great Lakes Computer. We specialize in thorough system audits. Once we examine your organization, our professionals can recommend specific practices for much stronger IT security. We can also offer external management of your data against breaches. Ready to get started? We offer complimentary services to test your current system!