COMMENTARY: With the increased frequency and sophistication of cyberattacks, businesses often look for comprehensive coverage and risk management solutions to combat the ramifications associated with cyberattacks. Cyber insurance, specifically, has provided companies with financial protection and peace of mind, along with numerous other advantages. No longer simply a “nice to have,” it is now a precondition of doing business. This reality means that cyber insurance is a critical element of any cybersecurity strategy.
As of 2023, the average cost of a cybersecurity breach amounted to 9.48 million dollars, an approximate 5% increase from 2022 – making cyber insurance a necessity rather than a luxury for organizations across industries. Similar to how home fire insurance would not be underwritten for a house without smoke detectors, why would cyber insurance be approved for an organization without the proper cyber protections in place? Cyber insurance acts as a catalyst for cybersecurity investment by creating a symbiotic relationship between financial protection and proactive risk management. As businesses recognize the interconnectedness of robust cybersecurity measures and insurance coverage, they increasingly make strategic and sustained investments to safeguard digital assets and mitigate the impact of cyber threats.
Yet rising costs of premiums and increasingly stringent underwriting requirements pose significant challenges. Premiums have soared into the stratosphere ever since COVID brought with it work-from-home policies, vastly increasing the occurrence of ransomware, phishing, and the like. As insurance providers caught on to the new reality, they saw that to remain profitable (which is, don't forget, their main objective), they’d need to dramatically increase the cost of coverage.
Traditional Security Measures No Longer Cut it for Cyber Insurers
Cyber insurers today are increasingly demanding validation of sufficient cybersecurity precautions as part of the underwriting process. They have recognized that traditional insurance approaches, relying on one-time vulnerability scans and non-continuous checking, create limitations to managing catastrophic cyber risks and, thus, are no longer sufficient. Cyber insurance ultimately forces organizations to be aware of their risks and vulnerabilities. By conducting more in-depth pre-audit evaluations and thorough assessments of an organization’s cybersecurity posture, cyber insurers can identify the organization’s vulnerabilities and suggest improvements. Policyholders are required to comply with the suggested changes or face high increases in premiums.
Continuous Exposure Management Can be the Answer
This is where leveraging a continuous exposure management approach can become a critical component. Proactive and methodical, continuous exposure management systematically assesses vulnerabilities within an organization, IT systems, networks, software, and applications. Generally speaking, continuous exposure management provides continuous monitoring versus point-in-time assessments, comprehensive attack surface visibility, risk-based prioritization, and attack path analysis. It also integrates external threat intelligence, grants automated compliance mapping, and provides predictive analytics. These capabilities meet the evolving requirements of cyber insurers, providing a more comprehensive, real-time view of an organization's cybersecurity posture – all of which contribute to a more accurate risk assessment and potentially lower premiums for well-managed organizations.
Making continuous exposure management a requirement or integrating it into insurance policies creates a mutually beneficial scenario for both parties. Insurers can reduce their own risks and potential payouts, while businesses benefit from lower premiums and smarter cybersecurity investments. It provides a roadmap for organizations to navigate the complex landscape of cyber threats and insurance requirements, ultimately paving the way for a more secure and cost-effective future.
Cyber Insurance and Continuous Exposure Management: Win-Win
Cyber insurers have an important and unique role in educating policyholder companies about cyber risk. They can provide tangible tactics to help them improve their security posture, which benefits both parties. Company executives are often unaware of the risks associated with cyber incidents or think their cyber insurance policy will cover it all. Lower premiums for policyholders leave room for spending in other areas of their business. Although cyber insurance will never be able to remove cyber risk entirely, combining continuous exposure management with cyber insurance is the arsenal that all organizations need.
The synergy between cyber insurance and continuous exposure management creates a powerful strategy for comprehensive risk mitigation and financial protection. This combination has numerous benefits: Reduced premiums and enhanced coverage for businesses with strong continuous exposure management practices; optimized resource allocation focusing on the most critical vulnerabilities; dynamic risk assessment enabling flexible insurance policies; improved incident response capabilities; data-driven decision-making for both cybersecurity and insurance strategies; simplified compliance processes; and a holistic approach to risk management addressing both prevention and mitigation.
Companies have the power to write their own future regarding cybersecurity. By allocating budget to cyber insurance and continuous exposure management, they’ll create a robust defense against cyber threats. While cyber insurance provides immediate financial protection, continuous exposure management offers long-term risk reduction. Over time, this strategy often proves more cost-effective than relying solely on insurance or reactive security measures. Preventative solutions like exposure management will always be less expensive than post-breach alternatives, but combining them with cyber insurance provides a comprehensive safety net. This approach not only protects the company financially but also drives continuous improvement in its security posture, creating a virtuous cycle of reduced risk and optimized protection.
ChannelE2E Perspectives columns are written by trusted members of the managed services, value-added reseller, and solution provider channels.
