Insurance regulators recommend Cyber Risk Insurance

In the last 10 years, there has been a 100% increase in cyber threats. The insurance regulators are quite well aware of this and hence have recommended Cyber Risk Insurance as a comprehensive way to save the vulnerables. This year in June, Commissioner Luis Aguilar shared his concerns over cyber risks, noting both the ever-increasing frequency and costs of attacks. According to him:

1. Cyber threats are of particular concern as of the widespread and grave impact it can have on the integrity of capital markets’ infrastructure and on public companies and investors.
2. In a company, the board of directors’ risk assessment and avoidance measures should include adequate cybersecurity means.
3. One conceptual roadmap boards should consider is the Framework for Improving Critical Infrastructure Cybersecurity, released by the National Institute of Standards and Technology (NIST) in February 2014. Some professionals have already shook their heads in agreement on this and suggested that this practise should become a baseline for best practises by companies.

Another speech was followed by in December by Sarah Bloom Raskin, Deputy Secretary at the Treasury, where she discussed the reasons to avail Cyber Risk Insurance and the impacts it could bring to reduce risk from cyber threats.

1. Today, some form of cyber coverage is essential for companies of all sizes - ranging from small family-owned shops to Fortune 500 companies. Some coverage to protect against cyber risks are already there - ranging from liability and costs associated with data breaches to e-vandalism; from business interruption losses to tangible property damage.
2. What cyber risk insurance actually does is offering some financial coverage in case there is an incident of data breach or similar vandalizing cyber actions. Significantly, cyber risk insurance and the associated underwriting processes can help you strengthen your cyber security measures. Again, qualifying for cyber risk insurance can also indirectly help you assess your bank’s risk level, the cyber-security tools and other best practises that you might be lacking.
3. Ideally, we can say that the growth of cyber insurance as an integral part of the trade mechanism will bolster cyber hygiene for banks across the country.

Cyber risk insurance should be essential for business of all kinds and sizes in order to get protection from both frauds and employee errors. Cyber risk insurance should never be made optional. Cyber risk insurance coverages vary widely and can be tailored as per needs - to cover the cost of breaches, forensics, crisis management, business interruptions and PCI assignments.