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Cyber Insurance & Data Loss Prevention: What You Need to Know

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Cyber Insurance & Data Loss Prevention

Cybersecurity maturity is a growing concern for businesses and organizations, especially today, where hybrid work models physically disperse operations and data are stored, moved, and accessed from highly distributed infrastructures. Although cybersecurity measures evolve, so do the cyber threats.

Cybersecurity Ventures foresees a not-so-optimistic future, as it predicts that the number of cyber attacks will intensify, diversify and increase at a 15% yearly growth rate. Furthermore, these attacks will severely impact businesses’ economies, with annual costs of $10.5 trillion in 2025, more than tripled than the cost back in 2015.

Within such a gloomy future, where financial loss, damage to reputation, and loss of sensitive information like personally identifiable information (PII), personal health information (PHI), and payment card industry (PCI) data will be at stake daily, businesses try to protect themselves better. Besides numerous solutions and adequate security awareness training, cyber insurance and data loss prevention (DLP) strategies are two critical components of a comprehensive cybersecurity plan against highly skilled cybercriminals, negligent insiders, and ambitious bad actors.

What is Cyber Insurance

As a metaphor for Newton’s 3rd Law of Motion, stating that for every action (force) in nature, there is an equal and opposite reaction, the cyber insurance industry market will boom in the following years as a reaction to cyberattacks’ exponential growth force. According to GlobalData report: “The global cyber insurance market was worth $7bn in gross written premiums (GWP) in 2020 and will reach $20.6bn by 2025”. What is this promising and fast-growing industry, and most importantly, how can it help businesses against cyber threats?

As cybercrime evolves, ransomware attacks small and large enterprises due to businesses’ willingness to pay the ransom. Having that in mind, insurance companies are tightening cybersecurity standards before granting insurance coverage to their clients to lower their risk.

Cyber insurance is a policy with an insurance carrier that helps organizations reduce their financial risk exposure by compensating the expenses of damages and recovery following a data breach or ransomware attack.

Cyber insurance policies typically cover a range of expenses, including regulatory fines, legal fees, and the cost of notifying affected individuals. Policies may also cover the costs of restoring lost or damaged data and the expenses associated with business interruption. Furthermore, cyber insurance protects businesses against the expenses of audits, forensics, compliance fines, legal actions, and even extortion payments.

Back in the past, cyber insurance used to be a liability insurance that a business could add to regular business insurance, providing conventional insurance coverage. Today, as cybercriminals have much greater potential, this doesn’t suffice. Enterprises need a discrete cyber insurance policy from insurers aware and specialized in the cybersecurity threats and risks a sector may encounter.
Cyber insurance provides two types of coverage, although in many cases, the scope and the scale of the coverage are altered due to the evolution of the cyber industry and threats:

  • First-party: protects a company when it incurs expenses from a data breach.
  • Third-party: protects a company from a third party sue for allowing a data breach.

When the scale and scope change, so does the coverage cost. Cyber insurers work closely with subject market experts (SMEs) to evaluate the evolving cybersecurity environment and develop a price for their services. To that end, cyber insurers screen their customers to check what measures and risk controls they take and to what extent. If an adequate cybersecurity plan is implemented, and data is protected through a robust DLP solution, the company is considered more “insurable,” and the premiums may be lowered.

What is Data Loss Prevention (DLP)

DLP is a set of strategies and technologies designed to protect sensitive information from unauthorized access, disclosure, or loss, from various threat sources, like accidental data leaks, insider threats, and malicious attacks. DLP is a mandatory requirement in many regulations, and businesses must devote all their resources to implement a solid and regulations-compliant DLP solution.

DLP solutions typically involve monitoring data endpoint, network, and cloud locations, and controlling access to data in motion, data at rest, and data in use, to prevent data exfiltration and exploitation. DLP solutions can help organizations identify and address risks and weaknesses, enforce policies, feed forensics, and prevent data breaches.

To effectively implement DLP strategies, it is crucial to understand the types of data an organization handles and where it is stored. This information can help security professionals determine which data is most valuable and at risk and which security measures are necessary to protect it through:

  • A risk assessment to identify the data risks and the location of the most valuable data.
  • The development of clear data handling policies and data accessing procedures.
  • Effective DLP solutions implementation to monitor and control sensitive data.
  • Regular review of the DLP solutions, policies, and procedures.
  • Regular audits and assessments to ensure the efficacy of the DLP strategy.
  • Training on data security best practices to increase employees’ security awareness.

By taking these measures, a business improves its cybersecurity posture, which will most likely lower cyber insurance costs.

The perfect cyber insurance/DLP cocktail recipe

Cyber insurance provides financial protection in the event of a cyberattack or data breach, while data loss prevention strategies protect sensitive information from unauthorized access or loss.

While cyber insurance and data loss prevention are critical components of a comprehensive cybersecurity plan, they do not substitute other cybersecurity measures. To get the perfect combination:

  • Implement a range of strategies to protect against cyberattacks, including strong passwords, MFA, Zero Trust Approach (ZTA), and regular software updates.
  • Choose a cyber insurance policy that adequately covers the organization’s specific needs.
  • Understand any exclusions or limitations in the policy and work with an insurance provider who can propose the best coverage options.
  • Have a thorough understanding of the organization’s data, where it is, and the security needs.
  • Add an adequate portion of employees’ security awareness training.

Mix well. Enjoy.

About the Author: Christos Flessas is a Communications and Information Systems Engineer with more than 30 years of experience as an Officer of the Hellenic Air Force (HAF). He is an accredited NATO tactical evaluator in the Communication and Information Systems (CIS) area and the National Representative (NatRep) at Signal Intelligence CIS and at Navigation Warfare (NavWar) Working Groups. Christos holds an MSc in Guided Weapon Systems from Cranfield University, UK. He has also attended numerous online courses such as the Palo Alto Networks Academy Cybersecurity Foundation course. His experience covers a wide range of assignments including radar maintenance engineer, software developer for airborne radars, IT systems manager and Project Manager implementing major armament contracts.

Christos is intrigued by new challenges, open minded, and excited for exploring the impact of cybersecurity on industrial, critical infrastructure, telecommunications, financial, aviation, and maritime sectors. Christos is also a writer for Bora.

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