Cyber Resilience: Pairing Cybersecurity with Insurance

Did you know that Cybercrime is projected to cost the global economy $10.5 trillion in 2025? In Australia, the Australian Cyber Security Centre reported a 13% increase in cyber incidents compared to the previous fiscal year. 

 

Understanding cyber threats 

Cyber threats present a persistent challenge for Australian businesses due to their constantly evolving nature and ability to affect organisations of all sizes and industries. A survey by Cloudflare found that 41% of Australian businesses experienced at least one data breach in the past year, with 33% reporting 11 or more breaches in the same period. This data reflects that breaches can occur even when cybersecurity measures are in place. 

 

Unlike traditional business risks, cyber threats adapt quickly. Attackers continuously develop new techniques to bypass security systems, exploit vulnerabilities, and target human elements within organisations. 

The cyber insurance market is developing products designed to address these evolving risks. 

Why cybersecurity measures alone may not fully eliminate risk 

Despite investments in cybersecurity infrastructure, Australian businesses continue to experience breaches for several reasons: 

• Human Factors: Social engineering attacks and human error can undermine technical security measures. Employees may inadvertently click on malicious links or fall victim to phishing campaigns. 

• Zero-Day Vulnerabilities: New software vulnerabilities are regularly discovered. One in five critical vulnerabilities has been exploited within 48 hours of discovery, creating windows of exposure even for organisations with robust patch management. 

• Increasing Attack Sophistication: Cybercriminals often use advanced methods and resources comparable to those of legitimate businesses, requiring ongoing adaptation of defensive measures. 

• Operational Disruptions: Security incident responses may impact business productivity and access to systems, potentially affecting customer service and revenue. 

• Resource Constraints: Organisations typically have limited cybersecurity resources, while attackers need only one successful entry point. 

The role of cyber insurance in risk management 

Cyber insurance products are designed to complement cybersecurity efforts by providing additional layers of financial protection and incident response support. 

• Risk assessments: Insurance providers often conduct detailed assessments that may identify vulnerabilities or compliance gaps not previously recognised. 

• Incident response: Many cyber insurance policies include access to specialised response teams that assist with damage assessment, containment, forensic analysis, legal matters, public relations, and technical remediation. 

• Financial support: Cyber insurance can provide coverage for costs associated with incident investigation, remediation, legal compliance, and business interruption. For example, ransomware incidents account for approximately 81% of claims involving recovery expenses. 

• Regulatory compliance support: Policies may include legal assistance navigating data protection regulations and breach notification requirements. 

• Insights from claims experience: The collective data from insurance claims can offer valuable information about emerging threats and effective defensive strategies. 

 

Selecting appropriate cyber insurance coverage requires understanding how different policy components align with specific business risks and existing security measures. 

 

Cyber insurance policies vary in their components, coverage options, and costs, often influenced by factors such as the nature of the business risks involved and the organisation’s cybersecurity measures.  

 

Disclaimer: 

The information provided is intended for general informational purposes only and does not constitute professional advice. While every effort has been made to ensure the accuracy and completeness of the information contained herein, Add Insure makes no guarantees or warranties regarding its applicability to your specific situation. 

Insurance needs and requirements can vary significantly depending on individual circumstances, local regulations, and business operations. We recommend consulting with a qualified insurance professional or broker to obtain advice tailored to your needs and circumstances. 

Add Insure shall not be held liable for any errors or omissions in this blog, or for any actions taken based on the information provided. For the most current and accurate guidance, please contact an insurance professional.