The Evolving Cyber Landscape
As technology advances, cyber exposures continue to evolve, presenting significant challenges for businesses and their insurers. The insurance industry is responding by adapting coverage terminology and working closely with clients to meet their changing needs. Several key trends are shaping the cyber landscape today, and understanding these is crucial for effective risk mitigation.
Ransomware and Business Email Compromise: Persistent Threats
Ransomware and business email compromise remain significant threats in the cyber world. The increased use of technology, especially with hybrid working models and cloud services, creates potential vulnerabilities if cybersecurity measures are inadequate. According to the Cyber Infrastructure Security Agency (CISA), 90% of successful ransomware attacks in the US begin with phishing attacks. These can lead to severe consequences, including data loss, reputational damage, and financial strain.
Employee training is critical in mitigating this risk. Employees need to recognize fraudulent emails and understand their role in protecting the company. “Taking the time to train employees is vital because phishing scams can harm individuals and companies in many ways,” said Siobhan O’Brien, head of cyber insurance, MSIG USA.
Vulnerability to Non-Malicious Events
The increasing interconnectivity and reliance on cloud services mean that even non-malicious events can have significant impacts. The 2024 CrowdStrike outage exemplified this, where a flawed software update caused widespread system failures affecting various industries globally. Cyber policies vary in their response to such events, highlighting the need for clarity on coverage terms.
“The biggest headline event in the cyber world last year was a non-malicious event, which some risk models didn’t anticipate,” O’Brien noted. This underscores the importance of keeping technology systems updated and having backup processes in place.
The Double-Edged Sword of Artificial Intelligence
Artificial intelligence (AI) presents both opportunities and challenges for cybersecurity. While AI can enhance threat detection and response, it can also be used by cybercriminals to commit fraud and execute social engineering schemes. The liability surrounding AI-driven decisions is also a growing concern.
“AI can be very positive from a cybersecurity perspective, but it can also be negative, allowing for an increased frequency of attacks,” O’Brien explained. Companies and insurers must work together to understand and mitigate these risks.
Adapting the Cyber Insurance Market
The US cyber insurance market is currently robust, with increasing demand for policies. Insurers are looking for clients with strong cybersecurity measures, such as multi-factor authentication and regular software updates. “Insurers want to understand the security posture of the company, their data encryption practices, and their capability to recover from an incident,” O’Brien said.
MSIG USA, as a new entrant in the cyber insurance market, brings a fresh perspective and robust infrastructure to the table. They are assembling a team with deep expertise and partnering with vendors to enhance claims handling capabilities.
“We want to know that the risks being brought to us are well managed, well considered, and well protected,” O’Brien emphasized. The company aims to provide comprehensive strategies that protect clients in today’s technology-driven world.
To learn more about MSIG USA’s cyber insurance offerings, visit their website.
