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According to Alliance Global Corporate & Specialty’s annual Risk Barometer, cyber threats to businesses worldwide continue to top global business risks for 2023, with incidents such as IT outages, ransomware attacks and data breaches. Released last month. Its analysis shows the frequency of ransomware attacks remains high, and the average cost of a data breach is at an all-time high of $4.4 million and is expected to rise to more than $5 million this year. The war in Ukraine and broader geopolitical tensions have heightened the risk of a large-scale cyber attack by state-sponsored operations.
Meanwhile, at the World Economic Forum meeting of business and financial leaders in Davos, Switzerland in January, experts predicted 2023 will be a breakout year for cybersecurity. An expanded threat landscape and increasingly sophisticated cyber attacks were cited. For the first time, widespread cybercrime and cyber insecurity have been named as one of the most pressing risks of the next 10 years in the WEF’s Global Risks Report. Cyber-attacks on critical infrastructure also rank as one of the most immediate crises with the greatest potential impact globally.
The opening weeks of this year seemed to confirm this, with the United Kingdom’s postal service suffering a ransomware attack — suspected to be from a hacker group with ties to Russia — that disrupted its international shipping services. In the United States, thousands of flights were grounded after a Federal Aviation Administration computer outage, although late last month the FAA said it had yet to find any evidence of a cyber attack or malicious intent.
Meanwhile, global geopolitical instability has helped close the perception gap between business and cyber leaders on the importance of cyber risk management, with 91% believing a far-reaching, catastrophic cyber event is somewhat possible within the next two years. Their responses to the WEF 2023 Global Cybersecurity Outlook report. Both business and cyber leaders have a clearer view of their organizations’ cyber capabilities and vulnerabilities, and cyber issues are becoming more integrated and focused on enterprise risk management.
But there is still work to be done. Although cyber and business leaders and boards of directors often communicate about strategies to combat cyber threats, they speak very different languages. The WEF report said cybersecurity professionals should speak less technical jargon, while boards should help them understand what assets and processes should be prioritized for security.
For risk managers and insurers, identifying and documenting ways to mitigate cyber risks is challenging. In an interview on page 13, Jennifer Santiago, 2023 president of the Risk & Insurance Management Society and director of Wakefern Food Corporation, talks about risk management and safety, how risk managers face erosion in safety, efficiency and cost. Cyber security for their organizations. Risk managers fear fewer markets will be willing to underwrite cyber and more exemptions will be introduced, a “Swiss cheese policy” Ms Santiago calls. That’s why many risk managers believe it’s critical to create a federal backstop to help deal with cyber risks — both large-scale cyber incidents and everyday cyber risks. While the devil is in the details as to how such a plan would be structured, momentum is building in the risk management community toward a solution that would ease some of the market pressures exacerbated by daily cyberattacks and be a positive step for policyholders. But to have any chance of passage soon in a bitterly divided Congress, insurers must also get full.
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