Businesses neglecting cyber insurance in favour of property-related protection

Businesses in Europe, the Middle East, and Africa (EMEA) are spending four times more of their budget on insurance for property, plant and equipment (PP&E) than they are covering cyber exposure.

 

Monday 16

Businesses neglecting cyber insurance in favour of property-related protection

That is according to a report released today by Aon in collaboration with the Ponemon Institute, which reveals 60% of total physical asset values are protected, compared with 15% of potential information losses.

 

This is despite 38% of EMEA firms suffering a cyber loss in the last 24 months, with an average of $3.3m (£2.5m) lost each time, and the potential business disruption from information asset losses 50% greater than PP&E damage.

 

“Most organisations spend much more on fire insurance premiums than on cyber insurance, despite stating in their publicly disclosed documents that a majority of the organisation’s value is attributed to intangible assets,” Aon global cyber insurance solutions COO, Vanessa Leemans, said.

 

“With 65% of EMEA organisations expecting their cyber risk exposure to increase over the next two years, cyber risk needs to be approached at an enterprise-wide level in order to achieve cyber resilience.”

 

The research involved a survey of over 500 individuals in the EMEA, 35% of which were in finance, treasury and accounting, 25% in risk management, 17% in corporate compliance and audit, while 9% were in general management.

 

It was also found that just 30% of businesses are “fully aware” of the legal and economic consequences of incoming EU General Data Protection Regulation (GDPW).

 

This comes into force on 25 May 2018, with failure to comply potentially resulting in fines of up to €20m or 4% of an organisation’s global turnover – whichever is higher.

 

The findings follow NTT Security forecasts that European financial institutions will face fines totaling €4.7bn in the first three years under GDPR, with 384 data breaches expected by 2021.

 

In addition, these predictions are thought to be conservative, excluding compensation claims, costs associated with lost customers, damaged reputations, and senior executive resignations.

 

“History tells us that companies that have dealt with data breaches poorly have seen loss of customers, reduced earnings and board level resignations,” AllClear ID CEO, Bo Holland said. “GDPR raises the stakes even higher.”

 

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