The layers of security applied to safeguard data needs to evolve with the increasing number of cyber threats which is only growing bigger in magnitude and frequency in the new tech era.
Technology, as we know, has gradually taken hold in the deepest parts of our residence ranging from high tech home security systems, smart TVs, smart phones, smart watches, CCTV cameras, all of which are connected to the internet. Additionally, with payments moving online, we also store data such as payment details with a number of websites for ease of use. If a restaurant or a store asks us for our birthday, we share the same unthinkingly in hopes of a free meal or a discount. What we do not realize is that our birthday is used as a security question in many applications. Therefore, such data if accessed through deceitful means can be used against us. Hence, it is imperative to consider protecting oneself against such security breach and safeguard from the aftereffects of such a violation. Global consumers will soon face the need to secure their private data to remove the possibility of the data being used as leverage to extract money.
Recently, cybercriminals with their Ransomware attack ‘Wannacry’ jeopardized over 2 lakh computers in more than 150 countries; it held people & organizations to ransom and caused havoc among many companies. In India, copious amount of demographic data stored in the Aadhaar database was leaked, which attracted widespread criticism against the biometric initiative. The leakage of biometric data provides uninhibited access to one’s personal records, thereby making individuals vulnerable to a variety of cyber threats if it falls in the wrong hands. Therefore, the existential risk posed by cyber attacks and data security vulnerabilities has become one of the prime concerns for boards of directors, management, government agencies and the public.
This when combined with the power of IoT, puts the end user at critical risk. IoT connects all digital devices which collect and share data. Therefore, high profile security breaches can cause irreparable damage to brands, revenues, stock prices and lead to other significant ramifications.
In the digital age, cybercrime has evolved into a daily phenomenon. The Indian Computer Emergency Response Team (CERT-In) reported 27,482 cases of cybercrime were between January and June in 2017.In India, a dramatic 300% increase in cybercrime from 1000 attacks a day in 2015, to 4000 attacks a day in 2016 has prompted the need for an extensive contingency plan to prevent considerable damage from cyber-attacks. Further, cyber malwares are expanding to smart phones and other devices. We have already witnessed one of the biggest ever breaches of financial data involving 3.2 million debit cards in India in October 2016. (Source: Data from Indian Computer Emergency Response Team (CERT-In))
Though cyber risk is a recognized critical threat to the economy, the investments on cyber insurance continue to remain small. The layers of security applied to safeguard data needs to evolve with the increasing number of cyber threats which is only growing bigger in magnitude and frequency in the new tech era. The crucial aspect of this new age risk is that it varies to a great degree from traditional risks, therefore, it lacks a constant pattern, nor can a set of preventive actions be enough to ensure effective data safety. Hence with an evolving cyber security strategies, companies also need to look at insurance to protect them when things go wrong.
Insurers have been gearing up for the onslaught of such new age risks. They have been focused in their approach, consulting, communication and constituting futuristic solutions to be prepared for such cyber threatened circumstances. Platforms like the World Economic Forum are bringing together the industry leaders to define, draft and recommend solutions on mitigating risks in the cyber enabled era. The experience garnered by insurance firms in treating cybercrime over the years, has equipped them with the knowledge and knowhow of dealing with cyber threats. Hence the support provided by insurance companies during the time of crisis is not only financial, but also expertise and experience in handling of the claim.
With the rise of cyber threats insurance products have undergone a high degree of modification with time. The principal cyber insurance cover under the policy covers damages and legal costs in connection with a data breach. Insurers are increasingly focusing on corporates to prepare for additional issues such as business interruption losses caused by cyber-attack. Coverage for lost earnings as a result of network breach is also covered under the policy. Further, as comprehensive legislations come into place, insurance offerings are being aligned beforehand to meet the regulatory requirements.
Cyber attacks will face a sharp incline in the years to come. When it does, corporate and insurance firms have to work cohesively to fight these risks to protect their consumers. For insurers, this is an opportunity to add value to the ecosystem by proactively adopting the risk manager position in the new age innovation economy.
*Source: cio.economictimes.indiatimes.com