With the rise in cybercrime and its devastating impact on business (it is expected that cybercrime) could cost trillions of dollars to business in the subsequent three to five years), cyber insurance is set to boost in the Asia Pacific region, various analyst and research groups said.
Naturally, business leaders are looking at various facets of cyber insurance and determining if it can safeguard them from cyber-attacks and what it can do for them.
After all, it only takes a single malicious ransomware or system breach for a business to lose all the trust of its customers and cyber insurance can assist in protecting the businesses from the potential economic damage that can be inflicted by a potential data breach.
A KPMG survey revealed last year that even though safeguarding their business from a looming cyber-attack has become the topmost priority among business leaders, there is a downward trend in the total number of information technology leaders claiming to be ready for a cyber-attack, only one in five IT leaders are presently ready for a cyber-attack.
A number of high profile cyber security breaches such as the NotPetya and WannaCry malware attack in 2017 as well as the data leaks of Marriot International, which have impacted companies all over the world, have given further credibility to the notion.
The Cyber Risk Management project (CyRiM) published a report titled ‘Bashe attack: Global infection by contagious malware’, in which it indicated a huge number of coordinated cyber-attack could cost up to USD193 billion in economic damages whereas the highest payout by insurance companies will amount to USD27 billion.
The difference of USD166 billion, means that 86 per cent of the overall potential economic losses are uninsured. The risks of incidents of attacks and damages are driving the fast growth of the specialist cyber insurance market and the demand is specifically more telling in Asia.
As per the CyRiM report, there is a growth of 87 per cent in the take-up of cyber insurance in Asia in 2017, and the present premiums are projected to be USD50 million.
Even as up to 20 per cent of Asian businesses are presently insured against data leaks, the report highlights that premiums are projected to stand between USD500 million and USD1 billion by 2025.
Furthermore, just 8 per cent of businesses in the Asia Pacific region are insured against a cyber attack and CyRiM projects more businesses to take up standalone cyber insurance.
A large number of countries in the Asia-Pacific Economic Cooperation (APEC) have embraced the APEC Cross-Border Privacy Rules and Privacy Framework and with the European Union’s General Data Protection Regulation currently is in effect, the enhanced regulation will only strengthen cyber insurance uptake.
The increase of the cyber insurance market is unavoidable. As part of contingency plan and comprehensive risk management, businesses should find out what risks they should be taking, what risks they should be avoiding, and what risks they should be transferring.
By taking up an insurance premium, the cyber attacks risk could be transferred.