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article image 3-15-24.jpgNavigating Today’s Cyber Risks

March 15, 2024

Businesses that collect, use, and manage data are facing growing risks from criminals. With cybercrime incidents rising dramatically and with the average cost of a data breach or theft nearing $5 million per incident, business owners seeking to protect their company assets need to understand both the risks associated with data losses and the need for appropriate cyber liability insurance.

This article explores some of the most common cyber threats companies face, and outlines insurance strategies designed to protect against the financial impacts a data breach can represent. To learn more about cyber insurance, visit our Cyber page.

Cyber Threats: Common and Emerging Data Risks

Businesses today face a wide range of cyber risks that can threaten their operations, reputation, and bottom line. These risks are constantly evolving as technology advances and cybercriminals become more sophisticated.

Here are some of the common and emerging cyber threats businesses should be aware of:

Common Threats

  • Ransomware Attacks: This involves malware that encrypts a user’s files, with the attacker then demanding payment to restore access to the data. These attacks are becoming more targeted and sophisticated, affecting businesses of all sizes.
  • Phishing Scams: These scams involve fraudulent emails or messages that appear to be from a legitimate source, deceiving individuals into providing sensitive data such as passwords, credit card numbers, and personal information. Spear phishing, a more targeted version, poses a significant risk to businesses.
  • Data Breaches: Unauthorized access to a company’s data can lead to significant financial and reputational damage. Businesses face risks from both external attacks and insider threats.
  • Advanced Persistent Threats (APTs): These are prolonged targeted attacks in which an attacker infiltrates a network to steal data over time. APTs are particularly dangerous because they can go undetected for long periods.
  • Supply Chain Attacks: Cybercriminals target less secure elements in the supply chain to gain access to the protected information of larger, more secure businesses. The 2020 SolarWinds attack is a prime example of this type of threat.

Emerging Threats

  • Cloud Security Risks: As more businesses migrate to cloud services, they face risks related to data breaches, misconfigured cloud storage, insufficient cloud security architecture and strategy, and compromised credentials.
  • IoT Vulnerabilities: The proliferation of Internet of Things (IoT) devices expands the attack surface for businesses, creating more entry points for cybercriminals. Many IoT devices lack robust security features, making them easy targets.
  • AI and Machine Learning-Based Attacks: Cybercriminals use artificial intelligence (AI) and machine learning to automate attack strategies, create more sophisticated phishing campaigns, and develop malware that can adapt to countermeasures.
  • Deepfakes and Disinformation: The use of AI to create realistic fake audio and video recordings poses a new threat in terms of spreading disinformation and compromising individuals or corporate reputations.
  • Zero-Day Exploits: These are previously unknown vulnerabilities in software that hackers can exploit before the developers have a chance to release a fix. Zero-day exploits pose a significant threat because they can be used to facilitate a wide range of cyber attacks.

Preparing a Cyber Risk Plan

Businesses are at constant risk from threat actors in cyberspace. With data thefts, ransomware attacks, and social engineering hacks representing billions of dollars of losses worldwide each year, the consequences of being unprepared for a cyber attack can be devastating.

The first step is to create a cyber risk plan. A cybersecurity risk management plan typically consists of the following key components:

  • Risk Assessment: Identifying the assets, threats, vulnerabilities, impact, and likelihood of cybersecurity incidents to prioritize risks.
  • Risk Mitigation Strategies: Developing and implementing measures to manage and reduce identified risks to an acceptable level. This includes technological solutions, policies, and procedures.
  • Prevention Measures: Implementing security controls and practices to prevent incidents, such as firewalls, antivirus software, and secure configurations.
  • Detection and Monitoring: Establishing systems and processes to detect and monitor potential cybersecurity threats in real-time.
  • Response Plan: Outlining procedures for responding to cybersecurity incidents, including roles and responsibilities, communication plans, and steps for containment, eradication, and recovery.

A risk plan is a living document and is designed to be updated periodically as risk profiles evolve. Each component of the plan is crucial for creating a comprehensive and effective cybersecurity risk management plan that can protect a business from, and mitigate the impact of, cyber threats. It is critical to keep in mind that planning, training, and preventive measures are only part of the risk management puzzle; cyber liability insurance is the foundation on which these plans are built.

Liability Insurance Solutions for Cyber Threats

Cyber liability insurance is a specialized form of insurance coverage designed to protect businesses against financial losses resulting from cyber incidents and data breaches. This insurance typically covers expenses related to immediate response and recovery after a cyberattack, including costs for investigation, data recovery, legal fees, settlements, and fines. It also often covers the costs associated with notifying affected individuals, providing credit monitoring services, and repairing damaged reputations.

Cyber liability insurance policies can be tailored to fit the specific needs of a business, depending on its size, industry, and the nature of the data it handles. As cyber threats evolve, these policies have become essential for businesses seeking to mitigate the financial risks associated with digital operations. It is imperative that business owners work with an insurance underwriter who possesses the knowledge, experience, and insight to protect sensitive data assets from theft or loss. ◼