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What do you see as the key current threats in terms of cyber risk? With Paul Bantick, Global Head of Cyber Risks at Beazley
In recent weeks, for example, several Norwegian Government departments have reported a cyber breach, while in the US government services contracting giant Maximus has confirmed that hackers exploiting a vulnerability in MOVEit Transfer and accessed the protected health information of as many as 11 million individuals. In the UK the NHS has also been the target of cyber criminals, with reports of patient data accessed.
Such headlines, and the fact that businesses of all sizes face continued threats, has prompted a leap in demand for cyber insurance coverage. Yet, as the demand grows insurers face the challenge of writing what remains a dynamic and ever evolving risk environment. State-backed actors continue to launch attacks, and the Russian invasion of Ukraine has exacerbated the risks.
For insurers, cyber remains a huge opportunity but the opportunities need to be balanced with effective exposure and risk management, as this week’s Big Question with one of the key players in the market underlines.
Ian Summers, Global Business Leader, AdvantageGo
Insurance group Beazley recently issued its Spotlight on Cyber & Technology Report and Paul Bantick, the Global Head of Cyber Risks at the insurer, says ransomware attacks continue to be the biggest threat to business.
“Cybercrime, particularly ransomware, is a lucrative business, and the barriers to entry are getting lower,” he explains. “After ransomware incidents peaked in 2021-22, many may have believed, or hoped, that the worst was over – fewer high-profile hacks in the news appears to have made it appear to many organisations that the threat was diminishing.”
“However, the cyber risk landscape is constantly evolving and new avenues of attack for cyber criminals are emerging,” he says. “For example, AI and machine learning are likely to bring a new set of cyber challenges, potentially enabling threat actors to operate at a greater scale or offer novice cyber hackers access to sophisticated malicious code. Also, cyber criminals are honing their techniques and attack methods, and where once cyber criminals took weeks to gain access to a network, now it is sometimes only hours.”
“Another risk is cyber fatigue, as maintaining a constant state of vigilance is challenging for some organisations,” Bantick adds. “However, we know from our claims statistics that businesses that invest in active IT security that includes measures such as educating employees on the risks, to deploying best practice security, should take comfort that this will improve their defence against cyber risk.”
Evolving risk landscape
He says the risks are changing as cyber criminals look to exploit new ways to impact businesses:
“With regards to ransomware, there are signs that Russian and Ukrainian cybercrime groups are starting to regroup as they seek to recoup lost profits, having splintered when the conflict in Ukraine broke out in 2022. The breakup of these groups resulted in a decline in the number of ransomware attacks during this period. However, businesses should not be lulled into thinking that this is the new normal. Instead, they need to be on the alert to the risk of ransomware attacks in particular, as not only are they on the rise again, but attacks tend to be more damaging and nearly all include some form of data infiltration and extraction.”
Rising risks and demand for protection have tested the market and Bantick says the market has responded in turn:
“The value of cyber insurance has been proven beyond doubt, and the insurance industry has responded to an avalanche of incidents and paid out billions in claims,” he says. “But just as importantly, we have shown the worth of having access to the expertise needed to manage a cyber incident, which combined to the financial support given by cyber cover, helps businesses to recover from the impact of an attack.
“How an incident is managed makes a significant difference to the rate of recovery and the impact on a firm’s reputation. We are now seeing growing interest in cyber insurance, particularly in Europe and increasingly in Asia.”
“In terms of appetite, the cyber market is the same as any insurance market, and we are looking for good partner clients who take cyber security seriously to work with,” he says. “As we know the difference good IT security makes, and the truth is firms who don’t take this seriously, will find it harder to get cover.”
Cyber war market
“However, the cyber insurance market must also recognise that certain risks are too big to cover, that their impact is of sufficient scale to be considered systemic and catastrophic. These risks are few, but they do exist. Cyber war is one such risk. The potential losses are increasing. As the wording of war exclusions evolves to reflect the reality on the ground, the good news is that a new cyber war market is evolving and this should be able to furnish some of the demand for firms that want to cover some of this larger impact risk.”
Looking at Beazley’s report Bantick says it found a mixed response from business to the threat, however:
“More than a third of businesses we surveyed (36%) for our Spotlight on Cyber & Technology Report plan to invest in cyber security this year,” he explains. “On one hand, this is good news, however, this represents a 10% decrease from last year (46%). The simple truth is, the risk is not diminishing and for many businesses, particularly those in the middle market, defences are not where they need to be.”
“For the insurance industry, working with clients to help them tackle these challenges, opportunities, and risks is vital to ensuring businesses operate in as safe an environment as possible,” he stresses. “We need to be continually educating clients about the risks, helping them to be vigilant to the continually shifting risk landscape and demonstrating the need to continue to invest in and enforce a defence in depth risk management strategy.”