Cyber Insurance and Cyber Defenses from a third-party risk perspective
No business with internet-connected devices can eliminate cyber risk entirely; rather it’s a question of how to manage it. Cyber insurance will enable organizations to lower their overall total cost of ownership (TCO) of cyber risk management while reducing their likelihood of experiencing a major incident.
Organizations with a mature and robust Third Party Risk Management (TPRM) program should include cyber insurance as a qualifying/mandatory requirement in their security baseline when evaluating third-party risk. This data can be crucial when deriving insights about the vast landscape of third parties. These third parties will constitute a more responsible group. Third parties who invest in their defenses will incur lower premiums when they opt for cyber insurance as they can demonstrate a higher level of defense and compliance with cybersecurity standards.
Factors influencing cyber risk adoption:
- General awareness of the business impact of cyberattacks/cybercrime
- Enables organizations to work with clients/business partners
- To keep pace with best practices
- Requested by the board or management
- Organizations who have experienced cyber attacks
- Regulatory requirement
The Cyber Insurance and Cyber Defenses 2024 report from Sophos states that Cyber insurance is increasingly a condition of doing business as organizations look to mitigate the risk of supply chain attacks by ensuring their commercial partners have insurance coverage.
The report also states that Board or senior management request contributes to more than a third of insurance purchases while the regulatory requirement is the least common purchase driver.
Opting for a cyber insurance policy as a strategic decision and as part of your third-party baseline security requirements will ensure third parties invest in improving their defenses to optimize the insurance position. Third parties who already have a cyber insurance policy are a testament to their willingness to mitigate the risk of supply chain attacks by ensuring they have sufficient insurance coverage.
By making smart investments in elevated cyber defenses, businesses can unlock considerable cyber insurance savings while also enjoying wider operational benefits and reduced likelihood of experiencing an attack.
