16 February 2018Insurance

Cyber risk management not keeping up with threat

Despite seeing cybersecurity as a top risk management priority, a survey finds out that only few senior executives believe in their organization’s ability to mitigate and respond to a cyber event.

In a global survey of more than 1,300 senior executives, two-thirds ranked cybersecurity among their organizations’ top five risk management priorities – approximately double the response to a similar question asked in 2016.

The survey conducted by Marsh and Microsoft also found that a vast majority – 75 percent – identified business interruption as the cyber loss scenario with the greatest potential to impact their organization. This compares to 55 percent who cited breach of customer information, which has historically been the focus for organizations.

At the same time, only 19 percent of respondents said they are highly confident in their organization’s ability to mitigate and respond to a cyber event. Moreover, only 30 percent said they have developed a plan to respond to cyber-attacks.

“Cyber risk is an escalating management priority as the use of technology in business increases and the threat environment gets more complex,” said John Drzik, president, global risk and digital, Marsh. “It’s time for organizations to adopt a more comprehensive approach to cyber resilience, which engages the full executive team and spans risk prevention, response, mitigation and transfer.”

According to the survey, fewer than 50 percent of respondents said their organization estimates financial losses from a potential cyber event and, of those that do, only 11 percent make their estimates in economic terms. Such calculations are a key step in helping boards and others develop strategic plans and investment decisions, including those related to cyber insurance purchase, the report notes.

At the same time, responsibility for cyber risk management continues to lie primarily with the information technology (IT) department, with inconsistent involvement of other stakeholders across the enterprise. According to the survey, 70 percent of respondents pointed to IT as a primary owner and decision-maker for cyber risk management, compared to just 37 percent who cited the president/CEO or the board of directors, and 32 percent who cited the risk management function.

“While technology is the foundation of any good cybersecurity strategy, companies can benefit from investing in non-technology solutions like risk management as part of a holistic approach,” said Matt Penarczyk, deputy general counsel, Microsoft. “Through advanced technology, tools and training, for example, companies can better protect the data in their networks and be ready for the business interruptions and reputational risks associated with cyberattacks.”

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