Businesses are facing major threats in the digital world
The global insurance industry is becoming more involved in cyber protection, especially as digital attacks become more common. Last year, Sony was hit by a data breach from hackers suspected of hailing from North Korea. The data breach would have caused Sony more than $100 million in losses, but the company had purchased cyber insurance protection, which meant that Sony was only liable for one-third of that amount. Now, more companies are acquiring cyber insurance and insurers are beginning to view digital attacks in a new light.
Insurers are beginning to view cyber attacks as natural disasters
The insurance industry is beginning to see cyber attacks in the same way it views natural disasters, largely because such attacks are unpredictable in nature and they can cause major financial damage to businesses. AIR Worldwide, a leading risk modeling firm working in the insurance industry, believes that hackers are like hurricanes and companies can prepare for the impact of these attacks with adequate insurance coverage. The organization has liked cyber attacks to 1992’s Hurricane Andrew, which caused approximately $26 billion in damage. This would be the approximate amount lost by a month long, sustained attack on Amazon Cloud.
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Risk modeling will help insurers manage risks associated with the digital space
New risk modeling processes for cyber attacks are helping insurers better protect businesses operating in the digital world. More companies are also acquiring cyber insurance coverage in order to guard themselves against hackers. A recent study from ABI Research predicts that the cyber insurance market will grow from $2 billion this year to $10 billion in 2020. The majority of cyber insurance policies cover the damage associated with business interruption and identify theft.
Cyber insurance is not a perfect form of protection for businesses
Cyber insurance may be a good form of protection, but it cannot prevent digital attacks. Such coverage represents a kind of safety net for businesses, and they must have adequate security measures in place to actively mitigate the damage of the attacks that they face. Without security measures in place, businesses will be exposed to major losses that they may not be able to cope with on their own.