Cyber ​​insurance and employee risk management training

It’s no surprise that cybersecurity investments are on the rise as management recognizes that protecting their companies from rapidly evolving cyber threats has become a strategic priority. CISOs and other security leaders must utilize the full range of cybersecurity resources available, and it is critical to recognize how these resources can complement each other.

Cyber ​​insurance has become popular as companies anticipate the potential financial consequences of a successful cyber attack. While it’s important to plan for this possibility, it’s also vital to focus on prevention. Once a company has already suffered a data breach or other type of cyber incident, the financial, operational and reputational costs can be severe and lasting. As with any form of insurance, the hope is that your company won’t need it.

Companies need to work with insurance providers to develop a cyber risk management approach that is affordable and effective. When companies improve their risk profile by implementing robust cybersecurity measures, such as organization-wide cybersecurity awareness training, this should be reflected in their premiums and coverage. By focusing on prevention, companies will reduce the likelihood of a major cyber attack.

The Rapid Growth of Cyber ​​Insurance
For over a decade, cyber insurance has been the best fastest growing sector of the global insurance market. According to Howden’s Cyber ​​Insurance 2024 reportpremiums had a compound annual growth rate of 30% between 2012 and 2022. This rate accelerated particularly rapidly between 2020 and 2022, with triple-digit increases between late 2021 and early 2022. However, rates have decline rapidly in 2023 and 2024 as companies take more aggressive measures to prevent cyber attacks.

Despite the stabilization of cyber insurance premiums, the overall growth of the sector is a reflection of the dramatic proliferation of cyber threats in recent years. For example, Howden reports an 85% increase in global ransomware attacks last year. The year 2024 Allianz Risk Barometer found that cyber incidents are “the top global business risk – for the first time by a clear margin – and across all company sizes.” IBM rEPORTS that the global average cost of a data breach reached an all-time high of $4.45 million in 2023.

Although companies are taking a more proactive approach to cyber security, the cyber threat landscape is constantly evolving. AI has lowered the barriers to entry for cybercriminals, while cyberattacks are becoming increasingly sophisticated and difficult to detect. This is why CISOs and other security leaders must make managing cyber risk a central focus of their entire business in 2024 and beyond.

Making the right investments in cyber security
Beyond cyber insurance, companies are investing in cyber security everywhere. PwC reports that 79% of executives will increase their cyber spending in 2024, up from 64% last year. As companies commit more financial resources to cyber security, it is critical to ensure that these investments are put to the best possible use. While cyber insurance premiums are no longer skyrocketing like they were a few years ago, the market is expect to continue to grow in the coming years.

It makes sense for businesses to pay for cyber insurance, especially given the number of successful cyber attacks and the rising cost of containing them. However, preventing these attacks in the first place has never been more critical, which is why companies need to understand which attack vectors cybercriminals are exploiting. According to Verizon’s latest data breach investigation report, 68% of successful breaches involved a human element. The most common initial attack vector identified by IBM is phishing, which relies on tricking and manipulating employees to gain access and steal information or money.

Security leaders are responsible for helping their companies determine where cybersecurity investments will do the most good. It’s clear that cyber insurance will continue to be an important element in cyber security budgets, but insurance must be complemented by preventative measures such as security training. This will help companies prepare for the worst-case scenarios, while doing everything possible to prevent these scenarios from becoming a reality.

A comprehensive approach to cyber risk management
Businesses around the world consider cyber threats to be the number one risk they face for good reason. Beyond the fact that cyber attacks are becoming more frequent, sophisticated and destructive, regulatory scrutiny is intensifying. For example, the SEC in the United States recently adopted “rules requiring periodic disclosures about a registrant’s processes to assess, identify and manage material cybersecurity risks.” Meanwhile, data privacy and security regulations will become more stringent in the coming years, especially as AI and its applications evolve.

As companies continue to increase their spending on cyber security, the recent drop in cyber premiums has made insurance a more attractive investment. In the coming years, companies and their insurance providers will need to work together to limit risk as efficiently and sustainably as possible. Just as auto insurance companies offer discounts for safe drivers and health insurance companies reward healthy behavior and preventive care, cyber insurance companies can incentivize a responsible approach to cybersecurity.

A critical factor in determining a company’s overall cybersecurity posture is whether it has implemented a robust cybersecurity training program throughout the organization. Awareness training doesn’t just help companies prevent cyber attacks. It also helps them limit these attacks when they are successful. While IBM rEPORTS that insurance is a significant factor in reducing the total cost of a data breach, found that employee training has an even greater impact on cost reduction—more so than encryption, threat intelligence, security and data protection software, and a range of wide of other factors. .

Cybersecurity has never been a higher priority for businesses, consumers and regulators. Now is the time for security leaders to develop a comprehensive cybersecurity strategy that leverages all available resources, from cybersecurity awareness training to insurance protection. By establishing multiple layers of cyber security, businesses will ensure they are protected regardless of the cyber threats lurking around the corner.