In light of the increasing number of cyber attacks, cited as the “biggest, most systemic” risk factor in the past few decades, security professionals have warned businesses against relying on cyber insurance, according to a recent article in Computer Weekly.
The warning comes in the wake of Stephen Caitlin’s statement in the media that cyber attacks have now become so dangerous that governments should step in to cover the risks. Stephen Caitlin is founder of Caitlin Group, the largest Lloyd’s of London insurer. He claims that cyber security is an even bigger threat than terrorism, and needs to have established state-backed schemes, just as some governments now provide terrorism cover. He points out that cyber risks are difficult to model and that a vulnerability in a widely-used software or Internet architecture can paralyze systems globally.
While insurance may help mitigate some of the financial impact of such a security breach, the adverse effect on the company’s reputation and business operations are things that insurance plans simply cannot mitigate in the same way. What businesses should focus on instead are the people, processes, and technology elements when it comes to tackling these cyber threats.
Tech-savvy customers have also begun talking of cyber security as their top-most concern. And companies have had to pay dearly, especially where customers’ personal or credit information was involved. As the cost of a deadly cyber attacks – and thus business risk – continues to rise, organizations are now expected to budget investments to secure their information systems against cyber attacks.
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