Five Risky Misconceptions about Cyber Insurance that are Detrimental to your Business
By Wesley Robinson, Risk Advisor
According to leading global insurer Allianz and their most recent risk barometer, cyber risk now ranks as the most important business risk globally, ahead of yearly top contender business interruption. Indeed, it seems that in the current environment where we are now more reliant on devices and the internet than ever before, everyone from IT managers to risk professionals to insurance companies all agree on one thing; that cyber risk poses a greater threat to their businesses than any other exposure.
According to the Center for Strategic and International Studies (CSIS), cybercrime costs the global economy approximately $600bn per year, with some experts estimating the annual cost will rise to over 1 trillion US dollars in 2021. When we compare this number to more traditional perils, the average economic loss from global natural catastrophes over the last ten years has been $208bn each year. This means that every tornado, hurricane, wildfire, tsunami, earthquake, and flood is being outpaced by cybercrime by three times. Next time you turn on the news and see an earthquake or tropical storm wreaking havoc, it might be helpful to picture a horde of hooded hackers running amok causing three times the damage to truly understand what we’re talking about.
With these kinds of numbers, surely companies must be buying cyber insurance in record numbers. This is where buying patterns start to diverge from the perceived and actual risk. According to a 2019 report from major London based insurer Hiscox, 41% of organizations now purchase cyber insurance and another 30% plan to purchase in the next 12 months. This begs the question, why aren’t more companies buying insurance coverage for a threat that is statistically similar to property coverage in many ways? There must be something else going on here.
Download the article to examine and debunk some of the misconceptions preventing companies from buying cyber insurance.