Cyber security readiness ‘stalls’ as attacks intensify, finds insurer Hiscox
Global cyber security has “stalled” despite a sharp rise in attacks and soaring costs from the fall out, according to the Hiscox Cyber Readiness Report 2019.
This lull in progress on cyber security has happened as attacks “reach a new intensity”, with more than three out of five firms (61 percent) reporting an attack in the last year up from 45 percent the year before. Hiscox found that the frequency of attacks has also increased.
Of the seven countries covered in the report Belgian firms were found to be the most heavily targeted, while US firms were the least attacked.
Small firms with less than 50 staff have come under increased digital hostilities. This group reported reported one or more incidents, representing a rise from 33 percent to 47 percent. While medium sized firms with between 50 and 249 employees saw attacks soar from 36 percent to 63 percent.
The report found that “more firms fail the cyber readiness test” when measured against the insurer’s quantitative model. It highlighted a small decline in the proportion of firms achieving ‘expert’ scores for their cyber strategy and execution, down from 11 percent in 2018 to 10 percent this year.
Perhaps more worryingly, nearly three-quarters, 74 percent, were deemed “unprepared novices” by report analysts and there was a “sharp drop” in the number of larger US and German firms picking up ‘expert’ scores.
The scores are affected by two factors: the first-time inclusion of French firms, which has reduced overall scores; and a fall in the number of large (with 250 to 999 employees) and enterprise firms (1,000 plus) in the USA and Germany that achieve expert scores.
Financial losses from cyber incidents have grown. The mean figure among firms reporting attacks has risen from $229,000 last year to $369,000, up 61 percent percent, with medium and large firms hit with a disproportionately large amount of the cost. Hiscox found that for large firms with between 250 and 999 employees cyber-related losses have reached $700,000 on average compared with $162,000 a year ago. German firms were hit hardest, with one business facing a $48 million bill from cyber incidents.
Firms are accelerating investment in cyber protection with spending up by a quarter. Total spend by the 5,400 firms analysed in the Hiscox report reached $7.9 billion for 2019, making the average spend per company $1.45 million, up 24 percent on 2018. Two-thirds of respondents (67 percent) told analysts they plan to increase their cyber security budgets by 5 percent or more in the next 12 months.
Gareth Wharton, Hiscox Cyber CEO, said: ‘This is the third Hiscox Cyber Readiness Report and, for the first time, a significant majority of firms report one or more cyber attacks in the past 12 months.
“Where hackers formerly focused on larger companies, small and medium-sized firms now look equally vulnerable. The cyber threat has become the unavoidable cost of doing business today. The one positive is that we see more firms taking a structured approach to the problem, with a defined role for managing cyber strategy and an increased readiness to transfer the risk to an insurer by way of a standalone cyber insurance policy.’
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news
Axon launches new reinsurer with capacity expansion in Asia
Aon merges construction and inland marine groups in growth strategy
MarketScout invests in cyber insurtech start-up Wingman
Prudential closes $2.6bn pre-Brexit longevity reinsurance deals
Brightside brings new COO on board to focus on digital strategy
