With the average total cost of a data breach reaching $4.45 million in 2023, organizations of all sizes are looking for ways to protect against and respond to cybersecurity attacks. In fact, over half of victim organizations choose to increase security spending after a breach, with 18% putting money towards cyber insurance.

Qualifying for a Cyber Insurance Policy

Choosing the right cybersecurity insurance policy includes understanding factors like the type of data you have and its value, notification requirements you must comply with, and specific risks others in your industry have reported.

But it’s important to note that coverage is not a guarantee. Underwriters will do a "wellness check" of your organization when you apply for cyber insurance. You may not qualify for a policy if you do not meet the following controls:

Regardless of whether you invest in cyber insurance coverage, it's encouraged to evaluate your organization's security stance through a lens of these five essential control areas. These are fundamental components of any robust cybersecurity strategy. Gaining insights into your organization's position in these areas is pivotal for charting a course forward and making informed decisions to enhance your overall security posture.

If your policies and procedures make you an acceptable risk for insurance carriers, they also reduce the risk of an attack.

If you're not sure where you stand in these areas, consider working with cybersecurity professionals who can conduct control testing to see if you meet the requirements and help you fill in any gaps.

Cyber Insurance as a Risk Management Strategy

The cyber insurance market is expanding as more industries opt for coverage to mitigate risks. While cyber insurance shouldn't be your only strategy in defending against cyberattacks, remember that you won't be able to purchase a policy when you're in the midst of an incident.

Proactively securing cybersecurity insurance can provide several benefits, including:

Cyber insurance can help you recover financially from a breach.

Costs associated with cyberattacks can be substantial. Cyber insurance can help cover direct expenses, like hiring professionals to investigate the breach, restoring compromised systems, and notifying affected individuals or businesses. Depending on your policy, it may also assist with the indirect fees of a breach, including:

• Business Interruption: When a cyberattack disrupts your operations, it can lead to significant revenue loss. Cyber insurance can cover the income you lose during downtime, which is crucial for small and medium-sized organizations that cannot endure prolonged interruptions.
• Reputational Damage: A data breach can negatively impact your organization's reputation, leading to decreased customer trust and a loss of future business. Cyber insurance may include coverage for public relations and marketing efforts to navigate the aftermath effectively.
• Ransomware: Ransomware insurance claims hit a record high in the first half of 2023. In ransomware attacks, where cybercriminals demand a ransom to restore access to your data, cyber insurance can help cover the ransom payment.

Insurance policies can help limit your legal liability.

Cyber insurance policies often come with access to legal professionals who specialize in data breaches. Their expertise can provide invaluable support in the event of an incident.

For example, breach attorneys can guide you through the legal complexities of a cyberattack. They can help you understand your obligations under relevant data protection laws and ensure you adhere to notification requirements, deadlines, and other legal obligations.

Your insurance policy may cover legal expenses for defending against claims, settlements, or judgments resulting from a data breach.

Carriers often have valuable relationships with security resources.

Cyber insurance carriers often have established relationships with trusted cybersecurity firms, like Eide Bailly. These relationships offer several advantages when looking at the broader picture of your organization’s security posture:

• Access to Expertise: Carriers can connect you with cybersecurity professionals who can assess your organization's security posture, identify vulnerabilities, and recommend measures to reduce your risk.
• Risk Mitigation: By leveraging these relationships, you can access security solutions and services that help reduce your organization's attack surface. These solutions might include penetration testing, threat intelligence, and cybersecurity training for your staff.
• Regulatory Compliance: Engaging with these security professionals can also help ensure your organization complies with industry-specific regulations and standards.

Navigate Cybersecurity Complexities with the Help of Experienced Professionals

While cybersecurity insurance can play an important role in incident recovery, it’s only one piece of a comprehensive security strategy. Working with cybersecurity professionals can help you understand your risks, fill any security gaps, and ensure you’re positioned to properly prevent, detect, and recover from a breach.