A survey conducted by the Risk and Insurance Management Society in September found that 80% of the companies bought a stand-alone cybersecurity policy in 2016. This implies that policies covering exclusively cyber exposures is now common practise for many large companies, as reported by CFO.
The annual RIMS cyber survey polled 272 respondents on issues ranging from exposure concerns, first-party and third-party risk, and government regulations.
According to the finding; almost 70% of companies now transfer risk of cyber exposure to a third party. Twenty-four percent of the risk managers surveyed say their companies will each spend more than $1 million on cybersecurity protections, including active monitoring and employee education, by year-end.
“Failure to keep pace with technological advancements will leave an organization at a terrible disadvantage,” said Julie Pemberton, director of enterprise risk and insurance management for Outerwall Inc. and president of RIMS. “Embracing technology has enabled organizations to strengthen their performance but at the same time has created many new exposures that risk management must address.”
Respondents are most worried about reputational harm (82%), notification costs (76%), and business interruptions caused by both network outages (76%) and data loss (75%) from cyber breaches. Cyber extortions (63%) and the theft of trade secrets or intellectual property (42%) are also concerns.
The purchase of stand-alone cybersecurity policies increased 29% from the previous year. That’s thanks, in part, to more versatile insurance packages, said Emily Cummins, a member of the RIMS board of directors.
“The take-up rate increases as more people are educated in the space,” Cummins said, who is also the managing director of tax and risk management for the National Rifle Association. “As insurance suites become increasingly available, more and more companies want to procure a plan that can fit their own unique needs.”
Companies with large supply chains may be pressuring vendors to invest in more robust cybersecurity programs, driving at least part of the growth in the sector. Twenty-five percent of respondents say their companies bought stand-alone insurance because of contractual obligations with other companies, a 17% increase from 2015.
The annual RIMS survey was distributed to the organization’s membership in August and early September. The majority of respondents work for companies with more than 1,000 employees and an estimated annual revenue of more than $1 billion.
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