Cyber risk growth constitutes huge threat but huge business opportunity by Insurance Business
We’ve come a long way in the last 20 years. In the mid nineties we were just discovering this wonderful new thing called the internet and the joys of waiting for a dial-up connection to AOL. Now, just two quick decades later, we live in a world where a large part of our lives is spent online.
The amount of data we store and share has expanded exponentially; devices have become more portable; and individuals and businesses have become reliant on our ‘connected’ infrastructure. All these things mean huge new risk –cyber risk.
The Insurance Information Institute (III) has just published Cyber Risks: the Growing Threat, which highlights the extent to which business, governments and in fact all of our lives are in danger of disruption from cyber threats. Criminals, terrorists and rogue states are among those with an interest in causing us potentially catastrophic damage and while traditional ways of doing this would perhaps involve explosives or chemicals, now we can be brought down by a computer.
Big businesses and organizations have been victims; Target, Adobe, even NATO. The III report refers to the recent Heartbleed bug which affected the vast number of organizations that use SSL, thought to be a highly secure method of data processing. Although many businesses were quick to admit that systems had been compromised, the report’s authors suggest many more were affected but didn’t go public.
Apart from the primary issue of potential disruption of service, theft of data and loss of sales, businesses are aware of the connected risks. If a business website is compromised or customer records are stolen, the damage to reputation could be the biggest risk; some companies may never recover from a massive breach. There’s also the potential for fines by regulators if data is deemed to have been vulnerable. For many businesses the threat is to the supply chain, internal management systems, communications…. The list is endless, such is our reliance on computers and connected networks.
As businesses become more aware of the risks, they are seeking solutions. Certainly stronger technology systems and meticulous management of the network infrastructure is vital; it’s no longer a case of a firewall and free anti-virus software being enough. However robust your client’s technology is, there will always be risk and that’s where insurance is key.
The availability, range and complexity of cyber-threat insurance products is growing. It is important that businesses make (or commission) a thorough assessment of their risks from cyber-attack, exploring the domino effect of the threat. While computers and connected technology have transformed the way we do business, they have also created a huge potential for damage to almost all areas of that business and the growth of this risk should not be underestimated.