Cyber Insurance and a Cybersecurity Consultant: Why You Need Both

Cyberattacks are costly.

The average cost of a network breach was $4.24 million in 2021.

Certainly, a significant blow to an organization’s balance sheet. However, any true measure of financial cost must also recognize the revenue lost from decreased productivity and a damaged reputation.

And while cyber insurance can help mitigate some of the costs, and safeguard an organization from financial devastation in the event of a cyberattack, it cannot defend against the attack itself. That is where a cybersecurity consultant is crucial.

Having a solid partnership in place with both a cyber insurance carrier and cybersecurity consultant gives an organization peace of mind.

How a Cybersecurity Consultant Compliments a Cyber Insurance Policy

A cybersecurity consultant helps an organization optimize insurance coverage, manage premiums, and ensure compliance with constantly evolving security frameworks and privacy regulations, while also staying on top of the latest cyber threats.

While surely not bulletproof, an organization is undoubtedly better positioned to weather a cyberattack by having a cyber insurance policy and a cybersecurity consulting partner.

The Cyber Insurance Market Continues to Evolve

As cyber threats continue to soar, so does the demand for cyber insurance. The cyber insurance industry is expected to grow from $7.6 billion in 2021 to $36.85 billion by 2028. The increasing demand is fueled largely by:

  • A rising number of claims from an ever-growing number of organizations hit by cyberattacks
  • The vulnerability of an increasing number of vendors in an organization’s supply chain
  • New legal and regulatory compliance requirements

Cyber insurance is now as essential in business as general liability insurance or any other insurance that is designed to ensure the survivability of an enterprise. However, it comes with a corresponding, and not insignificant, bite out of the bottom line.

Data shows that cyber insurance coverage cost an average of $1,485 per year in 2020. However, it is important to note that cyber insurance policy premiums are “not one size fits all.” Annual premiums ranged from $650 to $2,357 per year in 2020 across major industries. Additionally, the cost of premiums is expected to continue to rise.

Premium costs are determined by a number of factors including:

  • Company, industry, and services
  • Type of sensitive data stored, collected, or processed
  • Total # of personally identifiable information (PII)/protected health information (PHI) records
  • Data risks and exposures
  • Computer and network security
  • Privacy policies and procedures and annual gross revenue

Yet, just as a good driving record can lead to lower auto insurance premiums, demonstrating a lower risk factor to a cyber insurance underwriter can keep the cost of premiums down. 

 

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Cybersecurity Consulting Services: Invaluable for Getting the Right Insurance Coverage at the Right Price

Along with the growing necessity of implementing mature data privacy and cybersecurity frameworks, an organization’s general counsel needs to be able to prioritize the risks that their organizations face and invest in coverage against the greatest threats.

This is where cybersecurity consulting services come in. A cybersecurity consultant will take the time to understand how an organization operates and identify its cybersecurity vulnerabilities.  

More to the point, cybersecurity consults will:

  • Help organizations choose and obtain cybersecurity insurance coverage – Insurance carriers generally require that organizations complete cybersecurity questionnaires. These self-assessments are used to evaluate the strength of cybersecurity and data protection programs. Topics include security testing, how data is protected, and what an organization’s risk management and disaster recovery program looks like. A cybersecurity consultant will prepare an organization for, and help complete, these questionnaires.
  • Help keep premiums down – Insurance carriers have strict coverage requirements. Failure to comply may mean increased premiums or a loss of coverage. A cybersecurity consultant helps the organization put the necessary programs and frameworks in place to continuously satisfy coverage requirements.
  • Maintain programs for compliance – Mature cybersecurity and data protection programs need constant maintenance. A cybersecurity consultant does the heavy lifting for the organization.
  • Provide protection – With ongoing vulnerability assessments, vendor risk management, and data privacy services, a cybersecurity consultant actively protects the organization.

Cybersecurity Consultants Provide Support to the General Counsel

The reality of the global threat of cybercrime and cyberwarfare has inspired a growing list of new regulations and laws designed to defend against such attacks. While largely beneficial, these new rules also create challenges for organizations. Organizations must not only achieve and maintain compliance but also understand and acclimate to new and existing regulations so as to fully recognize their defensive purpose.

It is prudent, therefore, for the general counsel to work closely with a cybersecurity consultant to make informed decisions about how to:

  • Work within a regulatory framework to protect the organization against cyberattacks
  • Respond quickly to incidents such as data breaches
  • Remain in compliance with applicable data protection laws

A cybersecurity consultant bridges the gap between the general counsel and a cyber insurance carrier by providing:

  • Up-to-date information on new regulations and standards
  • Assessments of compliance and readiness
  • Experience that comes from consulting with scores of clients facing similar challenges
  • The ability to facilitate discussions and strategic planning around policy, priorities, vulnerabilities, adversary testing, incident response management, cyber insurance, as well as emerging threats

A cybersecurity consulting partner will also provide valuable insight as the general counsel works with the chief information security officer to implement programs that help an organization prepare for, and quickly recover from, inevitable cyber incidents. When an incident occurs, these executives must be prepared and get involved and lead in the response early on to prevent a full-blown crisis by:

  • Minimizing damage to the corporate reputation
  • Mitigating the loss of key data
  • Avoiding litigation and penalties by enacting a rapid and appropriate recovery plan
  • Communicating regularly with the cyber insurance provider
  • Ensuring an organization acts in ways consistent with its insurance policy

Satisfying Requirements for Insurance Coverage

With a cybersecurity consultant’s expertise, guidance, and support, a general counsel is better prepared to satisfy a cyber insurance carrier’s requirements for coverage.

With a watchful eye on an organization’s cybersecurity and data protection programs, a cybersecurity consultant will ensure an organization meets the requirements of its cyber insurance policy.

Gain Peace of Mind by Partnering with a Cybersecurity Consultant

Reach out today and learn how your organization can stay compliant with its cybersecurity insurance policy.

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