Cyber Insurance as a Way to Protect Your Data from Hacker Attacks
Globalization has become a trend of the 21st century. The positive side of this process is an increase in international trade, an increase in the scale and pace of capital movements, the emergence of 24-hour real-time global financial markets. This was largely due to modern technologies and the Internet. They allowed overcoming the distance, boundaries and time for the exchange of assets, ideas and scientific innovations. Michio Kaku, an American scientist of Japanese descent, believes that with an average growth rate of the economy, the Earth civilization will become a planetary civilization within the next 100 years, the energy consumption of which is comparable to the energy received by the planet from the Sun.
Globalization and Hacker Attacks
However, globalization has also negative aspects. One of which is hacker attacks. Cybercrime has long since become outside borders, has lost its nationality and has broken language barriers. American energy companies are attacked by hackers from the Netherlands, Canada, and the United Kingdom, and in recent attacks on Ukraine's strategic sites, experts note the Russian track.
A recent study written using free online plagiarism checker with percentage shows that data loss is becoming one of the most serious threats to the business. According to experts, the damage from hacker attacks committed in recent years in the world ranges from $300 billion to $1 trillion. And these indicators tend to increase.
In the light of the growing number and severity of cybercrimes, the risk management of organizations is forced to add to its list one more danger for business and the state, which was previously ignored. Hacker attacks have become a reality today, not episodes of science fiction films. It is necessary to work with these risks and look for ways to optimize them. There are three main directions for such purposes. These are technological security solutions, educational work in the field of counteraction and prevention of cyber crimes, as well as cyber insurance.
In recent years, the tool of cyber insurance has become widespread on the international market. And now it is offered by more than 60 insurance companies around the world. The main goal of cyber insurance is to protect against large-scale hacker attacks. This type of insurance provides a financial mechanism for recovery after major losses, helping businesses to return to normal operation, maintain stability, solvency and reduce losses as a result of a break in production.
Is There Any Point in Protecting Against Cyber-Risks?
No matter how perfect the protection systems are, how quickly they would not develop, the attackers will always be one step ahead. Any company that performs daily processing of electronic personal information by using portable devices, computers, servers, Internet resources, is constantly exposed to the risks of cyber attacks. With the help of malicious software for smart phones, cybercriminals are able to access electronic purses and online banking systems connected to smart phones and tablet PCs. Hacker attacks can lead to server shutdown, loss of trust in the company and loss of profits, and compromising or leaking personal data to accountability and fines, damage to reputation. When analyzing threats to leaks of these companies, it is impossible to exclude very significant off-line factors, such as banal employee errors, corporate espionage and deliberate disclosure of data by company's own employees. It is extremely difficult to prevent the cyber attack or data leakage, and the cost of resolving the damage from a successful attack can reach billions of US dollars. The most effective method of fighting against cyber threats is insurance of such risks, as it covers the damage caused by the attack, and the insurance company undertakes to restore the situation.
Why Do Companies Need Cyber Insurance and Why Do They Buy It?
Unlike traditional business risks such as man-made disasters, prosecutions, cyber incidents can overtake business anywhere in the world and in virtually every business process. The only question is whether the company knows how to deal with the consequences of cyber incidents and how much it is ready to lose. Cyber-risk insurance contributes to a significant reduction in possible financial losses and compensates for the costs of data recovery and investigation, as well as reimbursement of lost profits due to forced breaks in activities, expenses for restoring customer data and anti-crisis PR to restore reputation. Insurance compensates expenses for IT specialists, lawyers, PR. If the incident has already occurred, cyber insurance will provide a clear structured protection in the form of expert assistance in case of need, protection from financial consequences and reputational damage.
Companies in a High-Risk Group
Any company that deals with the storage of data, transactions with them and the transfer of data, is in the risk zone. Transport companies, industry, strategic facilities every year attract more attention of burglars. The attacks on the IT infrastructure of enterprises are growing every year by 20% according to Group IB.
Cyber attacks affect not only high-tech enterprises but all enterprises that own sensitive personal or financial data or who use information systems and web solutions. For example, the financial sector, lawyers, medical institutions, manufacturing enterprises, e-shops, trading enterprises (client cards), hotel business, government institutions, etc. are under threat.
Retailers gain access to a large volume of customer information, including credit and debit card numbers. Most air tickets and travel packages are booked and paid through the Internet. The risks associated with the creation of clone sites and fishing resources for the theft of money and customer bank card data are relevant to this area. Fraudulent sites that sell counterfeit air tickets and bank cards of digital banks appear every day on the Internet.
What Is Happening in the Global Cyber Insurance Market?
Today there is almost a mass purchase of cyber insurance. Almost 90% of the world market of cyber insurance operates due to strict standards set by the US. In the light of the new data protection standards that will soon be introduced in the European Union, it is possible to assume the growing need for enterprises to purchase insurance in the future. Enterprises have already begun to increasingly understand the real price of their data and the level of responsibility for them. As enterprises see the real damage associated with attacks, the interest of companies in this kind of insurance becomes real. Of the insurers who applied for the purchase, it is those enterprises that have already directly encountered attacks showing an interest above the average to the subject of cyber insurance.
The Growing Demand for Cyber Insurance
Demand for cyber attack insurance services in Asia jumped 87% after the global attack of the computer virus WannaCry, which affected hundreds of thousands of computers in more than 150 countries, said the American insurer AIG. In general, the world’s demand for this type of insurance increased by 38% in annual terms.
More than 1.3 million computers were affected as a result of a massive attack of the WannaCry virus, paralyzing the work of hospitals in the UK, as well as disrupting the functioning of transport networks and operations of many companies in various business areas. In this regard, there was a surge in demand for insurance against the risks of cyber attacks.
The insurance company Sompo International warns that insurers are at risk because they offer quite soft insurance terms against such risks, in particular, they offer customers additional coverage, without demanding an increase in premiums. The potential risks for the insurance sector can reach enormous proportions, taking into account that about 80% of large companies around the world suffer from cyber attacks each year, while the annual damage caused by cyber attacks to the global economy is estimated at up to $400 billion, writes the FT.