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Here in lies the challenge for both the insurer and insured. A challenge that must be addressed as cybersecurity risk management regulation is implemented. Cyber insurers understand that the long term costs of a cyber attack can mount. The legal costs roll on until the legal challenges end and with new cyber regulations legal risk maybe of increased concern for insurers.
Cyber regulation brings a twist for the insured and the insurer. It drives cyber compliance into the board room of the insured and for the insured the costs of a cyber attack and legal risk, when cyber regulation takes effect will increase.
1. If you suffer a cyber attack, you may have to demonstrate to a regulator that you complied with appropriate cyber risk management regulation.
2. It’s highly likely that in the near future public firms will have to provide evidence of their cyber compliance to regulators, such as the SEC. Compliance data that will be public and open to regulatory compliance and legal interpretation.
3. Data provided to market regulators will be available to credit rating agencies. Data that could be used to affect the cost of capital.
4. Board members will be required to declare their personal cyber knowledge and experience.
5. Cyber regulation creates new legal and compliance risks for covered organistions and board members.
Some of the above could be used in the event of a cyber attack to challenge the oversight and assurance of cyber risk management. Could it also be used to invalidate a cyber insurance policy, thoughts?
These are just a few considerations that could be used to evaluate a cyber claim.
The long term costs of a cyber attack may be both financial and non financial. They could result in both civil and criminal penalties.
Ted Dziekanowski
#cyberinsurance #cyberriskmanagement #cybersecurity #cyberregulation
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