Cyber Insurance has become a necessity in the modern business landscape as cyber crime continues to increase in number and sophistication. The average cost of a data breach in the United States currently amounts to $9.44 million. According to industry data, the global cost of cyber crime is expected to rise by $23.84 trillion within the next five years.
Rising cyber crime costs have prompted to invest in Cyber Insurance policies to mitigate risks. As the demand for insurance has increased along with the severity of cyber attacks, Cyber Insurance rates have surged. Carriers have also become more selective about who and what gets covered, increasing premiums for high-risk industries such as health care and financial sectors.
Fortunately, firms can still take proactive measures to reduce Cyber Insurance costs by adopting better cyber security controls. Below, we’ve compiled key recommendations for organizations to reduce premiums while maintaining optimal cyber security.
6 Ways Businesses Can Reduce Cyber Insurance Rates
Given the ever-changing nature of cyber risks, insurance carriers are taking a closer look at how their clients control cyber threats. Organizations can mitigate risks and lower their Cyber Insurance rates by investing in the following security measures.
1. Implement Multifactor Authentication
Stolen credentials and account compromise lead to nearly 50% of all cyber attacks. Because of this, most Cyber Insurance providers now mandate multifactor authentication (MFA) for organizations seeking coverage.
This cyber security measure requires users to verify their identity through multiple factors before gaining access to an account, network, or operating system. For example, an employee must provide a password and confirm their identity through biometric data or by inputting a code sent to a different device. According to Microsoft, implementing MFA can block 99.9% of cyber attacks.
2. Deploy Endpoint Security Solutions
As businesses adapt to remote and hybrid work environments, the number of endpoints that need to be secured within the organization increases. An endpoint and detection response (EDR) solution can help organizations reduce risks and Cyber Insurance rates. This security solution features real-time endpoint monitoring, threat detection, and automated rule-based response to threats. EDR’s high degree of automation enables IT security teams to recognize and respond to malicious threats and activities quickly.
3. Practice Discretionary Data Storage, Access, and Transfer
The amount of data companies store, access, and transfer affects Cyber Insurance costs. A simple way to reduce the cost of premiums is by controlling the number of records with which a company deals.
Organizations dealing with sensitive data should also implement encryption and limit users authorized to access sensitive information. Lastly, businesses should have segregated backup systems as a safety net to recover from potential cyber attacks. While backups will not prevent cyber crime, they can help companies restore their systems quickly and prevent operational disruptions.
4. Invest in a Vendor Risk Management Solution
According to an industry survey, more than 50% of organizations reported experiencing third-party breaches in 2022. Any organization that depends on third-party vendors for important services such as data processing and software development is at risk of third-party data breaches.
A vendor risk management (VRM) solution reduces this vulnerability by identifying, monitoring, and mitigating the risks that third-party vendors pose to companies. This security solution includes a risk assessment and continuous attack monitoring for external vendors, increasing an organization’s alignment with security standards and lowering Cyber Insurance costs.
5. Conduct Cyber Security Awareness Training
Most cyber attacks are caused by human error, and contemporary criminals employ more sophisticated social engineering techniques to exploit users. For example, in 2022, phishing was the second-most common cause of data breaches and the most expensive, averaging $4.91 million in breach costs. Security awareness training can help reduce the risks of cyber attacks due to human error, as it empowers and educates employees to recognize and respond to common cyber threats.
6. Create an Incident Response Plan
Some cyber attacks can lead to major operational disruptions that can affect an organization for weeks or even months. A well-documented cyber incident response plan that tells security teams what to do if an attack is successful can help them limit the damage. This document also serves as strong evidence of cyber security preparedness, which can help reduce Cyber Insurance rates.
The Cyber Insurance industry is changing as threats continue to evolve. Rising Cyber Insurance rates pressure organizations to be proactive with their cyber risk strategies. For businesses to get the most out of their Cyber Insurance in the modern business world, they need strong cyber security measures.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080