Cyber Risk Insurance: What's the Buzz?

Cyber Risk, as anyone with a television is aware, is growing at a mind-boggling pace.  In a recent presentation, former Homeland Security Secretary Tom Ridge said, "The cyber world presents the greatest threat to U.S. security and economic well-being. Our infrastructure generally is exposed, raising the possibility of a catastrophe affecting millions of people."

High-profile breaches are an almost every-day occurrence. From the highest level of government, through small businesses, to the largest companies - it seems nothing is safe. The United States Office of Personnel Management, SonyPlayStation, NASA, TJ Maxx and Google – to name just a few –have all been stung.  Recently my wife's small business was hit with a "ransomware" attack.

It's just plain scarey.

Just this week, a member of the Federal Bureau of Investigations (FBI)  recommended that ransomware victims “just pay the ransom” if no other option exists and if they need access to their encrypted data.

Last Wednesday, during Cyber Security Summit 2015 at Boston’s Back Bay Events Center, Joseph Bonavolonta, the Assistant Special Agent in Charge of the FBI’s CYBER and Counterintelligence Program in the Boston office, observed that as the encryption standards protecting most ransomware samples, including Cryptolocker and Cryptowall, are so strong, the FBI generally advises victims to pay the ransom payments.

That can be cost serious money.  Usually, between $500 and $2000 - per machine.

Cyber risk can either continue to be seen as a negative – as another potential set of costs, complicated procedures and incoming legislative demands – or firms can use good cyber risk management as a differentiator from their competitors, as a selling point to clients, and as a measure of reassurance to stakeholders. 

One new option, still being worked toward maturity, is Cyber Risk Insurance.  Many companies are offering it, but the details of which is best are still being resolved.  As always - Caveat Emptor!

The choice is yours - learn, plan and protect - or wait for that pit-in-your-stomach feeling, when you turn on your system and see that you've been hit.

It's not a good feeling.