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Cyber attacks impact the top and bottom line, lost revenues, remediation costs, brand and reputational damage and legal costs. Don’t expect cyber insurance to cover everything. This HBR article makes the point that only 3% of the the global impact of the NotPetya attack of 2017 was covered by cyber Insurance.
It’s also a reasonable assumption that the broad and excessive impact of cyber attacks are far to big for the insurance and reinsurance market to pick up. Cyber is such a broad risk category, with threats emanating from script kiddies to Nation States, impacting corporates. Or geopolitically motivated attacks targeting CN.
But cyber insurance cannot be the backstop when it comes to a Nation State Hack. I’m not convinced that the solution is simply new financial products to underwrite the risk. At the end of the day, money has to come from somewhere, as the current COVID crisis has demonstrated. Piling on government debt.
Both government and corporates have to start and set the basic requirements for cyber security. Prepare for cyber attacks and plan for the fallout. The insurance industry has major part to play; maybe it’s time that the insurance industry defines the standards, like other insurance categories. I won’t get car insurance with bold tyres.
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