Insurance as part of cyber risk management
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Cyber risk management is a costly, demanding exercise and it can be hard to know where to start. Maybe that’s why some companies prefer to take an ad-hoc approach. However, as cyber threats loom larger on the risk radar, it is becoming unwise not to invest more in their mitigation.
The main question is what type of cyber loss would be too much for your company to self-insure against. Then you can work from there and establish the risks which could cause that type of loss and how likely they are to occur. This involves defining and prioritising risks. Then you can orient your risk prevention measures accordingly.
It takes strong cross-functional cooperation and resources to do this job properly. A dedicated team would have to map out the details of the IT infrastructure, processes, dependencies etc. And that’s just the start. Then they have to assign the risks to categories (once they have defined the categories).
This type of project needs support from high places, which depends on making a compelling case to the senior management. To make this argument, you may need the backing of that risk assessment you wanted in the first place. It can turn into a chicken-and-egg situation, albeit with a lot at stake.
That’s where it helps to team up with an insurance provider. Insurers know all about managing risk and they can support you in gaining an overview of your company’s specific risk situation. They may also alert your company to scenarios that you hadn’t considered before, such as liability arising from risk accumulation.
So don’t just view insurance as a means of financial support in a worst-case scenario. It goes far beyond that, insurers understand just how damaging a cyber loss event can be. They will therefore also help you to avoid and mitigate risks, for example, through improved IT security and data protection.
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