https://www.cpomagazine.com/cyber-security/most-businesses-vulnerable-to-emerging-risks-not-covered-by-their-cyber-insurance/
By Alicia Hope
CPO Magazine
May 11, 2020
According to a new study by the Hanover Insurance Group, Inc., most businesses
are more vulnerable to emerging risks such as malware and ransomware attacks
than traditional threats such as the breach of personally identifiable
information. However, the report found most businesses were insured against
traditional cyber threats instead of the emerging risks. The study, which was
carried out in collaboration with Zogby Analytics, found that the cyber
insurance coverage gap poses an existential threat to the majority of the
businesses.
The current situation in cyber insurance
Most businesses contacted said the decision to purchase a particular policy was
based on recommendations from independent insurance agents. The study also
found most businesses understand the extent of cyber threats they face and
understand the negative impacts of such incidents. However, 42% of businesses
did not have adequate cyber insurance to cover the cost of a cybercrime-related
incident, despite 9 in 10 businesses reporting a cyberattack. Additionally, 60%
of businesses reported it would take just two days to become unprofitable in
case of a cyber attack that denies them access to critical systems or data,
while 92% said an attack would cause a negative financial impact. Despite 84%
of businesses feeling inadequately covered by their current policies, 38% have
not increased their cyber insurance policy limits within the past 12 months.
The study found small businesses being more vulnerable to cyberattacks than
large or middle-sized businesses. The majority of small businesses also lacked
cyber insurance coverage.
Another observation showed media coverage informed the decision to purchase a
cyber insurance cover for 50% of business leaders. Past attacks influenced 37%
of the business decision makers to purchase a cyber insurance cover. According
to Bryan J. Salvatore, president of specialty insurance at The Hanover, having
the appropriate cyber insurance protection will only become more important as
new technologies emerge, businesses become more connected, and cyber criminals
develop more sophisticated methods. He added that as businesses grow in
complexity, the advice of an independent agent becomes increasingly important
in helping business owners understand the many risks they may face and mitigate
those emerging risks.
[...]
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