How to improve your chances of being insured against a cyber breach

Businesses rely heavily on technology to drive operational efficiency. While this has benefits, it also brings with it challenges and risks, particularly in the realm of cybersecurity. As cyber threats continue to be a persistent concern for businesses there has been a marked surge in demand for cyber insurance as companies recognize the importance of financial protection in the face of data breaches, ransomware attacks, and other cybersecurity incidents. However, as the threat landscape evolves, so does the landscape of cyber insurance, with insurers raising the bar on their security requirements. 

While this is a concern for businesses that want to ensure that they are insured against potential security risks, there are a few considerations that can help improve their risk profile ahead of a potential breach or attack. Fundamental to this is cyber resilience within the broader framework of operational resilience.

Operational resilience is good business practice

Operational resilience is the ability of an organization to continue its critical functions and deliver services in the face of various disruptions. These disruptions can range from natural disasters to cyberattacks, and they can have severe consequences if not managed successfully.

Successful management of disruptions relies on various aspects of business continuity, disaster recovery and cybersecurity. When these work together effectively, the impact of an attack can be reduced. However, attacks and disruptions can still cause significant financial losses, and that’s where cyber insurance policies come in. Businesses transfer the remaining risk to a third party, the insurer, in order to minimize financial losses as far as possible.

However, the increasing frequency of cyber incidents is prompting cyber insurance companies to re-examine the extent to which they are prepared to cover losses. They are looking at the risk exposure in their portfolio and modifying the terms of cyber insurance policies to limit the scale of liability.

The evolution of cyber insurance

Cyber insurance policies have evolved to keep pace with the dynamic nature of threats, meaning insurance policy applicants now need to satisfy a more stringent set of security criteria. This evolving landscape of insurance necessitates a proactive and comprehensive approach to resilience. At the same time, there are a few key factors that underwriters assess to determine the level of risk associated with insuring an organization.

These include factors such as the type of business or industry that the organization operates in, for example healthcare and financial services, which are typically a higher risk for cyberattacks due to the sensitivity of the data they handle such as personally identifiable information (PII) or financial data. The insurance provider may seek to confirm that the systems, tools and processes that the business has in place to defend against cyber attacks meet specific standards. They may also stipulate that the insured business conducts specific security activities such as penetration testing on a regular basis – and failing to do so can invalidate the policy. 

To secure and maintain insurance coverage, companies stand to benefit from partnering with a Managed Service Provider (MSP) that can provide expert advice which assists with risk assessment, security compliance, incident response planning, and more, ensuring that organizations are well-prepared to face the challenges of the digital age. Working together, companies are able to meet the stringent requirements of cyber insurance policies and enhance their overall cyber resilience, which in turn improves operational resilience.

The right partnership can help maintain cyber insurance

Generally, insurers look favorably upon organizations that partner with MSPs specializing in cybersecurity, backup, recovery, and IT security services. This is primarily because these providers bring expertise in cybersecurity and data protection. They have the knowledge and experience to access an organization’s vulnerabilities, implement security measures and ensure compliance with industry standards and regulations. MSPs bring further benefits that make it easier for companies to meet insurance requirements, these include:

·        Proactive Monitoring: With 24/7 monitoring of the IT infrastructure, companies are able to identify and mitigate potential threats before they become major issues. This proactive approach can reduce the likelihood of a breach and impress insurers.

·        Data Backup and Recovery: Cyber insurance often requires robust data backup and recovery capabilities. MSPs can set up and manage secure backup systems to ensure quick data restoration in case of a breach or data loss event.

·        Incident Response: MSPs can help to develop and implement a well-defined incident response plan, which is a critical requirement for many cyber insurance policies. They can also assist in managing the aftermath of an incident, minimizing downtime and financial losses.

·        Security Updates and Patch Management: Keeping software and systems up to date is essential for security. MSPs can handle patch management, ensuring that an organization's technology is protected against known vulnerabilities.

·        Employee Training: MSPs can facilitate cybersecurity training for staff, helping companies to meet insurance requirements related to employee education.

·        Documentation: Maintaining detailed records of security measures, incident response plans, and security audits is crucial for insurers. MSPs can help create and maintain these records efficiently.

Good security practices improve insurability

Having robust backup and recovery procedures in place can minimize data loss and downtime, reducing the financial impact of a cyberattack. Organizations that prioritize these processes not only enhance their overall cybersecurity posture but also improve their eligibility for cyber insurance coverage and their ability to recover from cyber incidents effectively.

In today's interconnected world with an evolving landscape of cyber insurance, a proactive and comprehensive approach to operational resilience is not complete without robust cyber resilience measures.

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Sean Tilley is Senior Director of Sales of EMEA at 11:11 Systems.