Skyrocketing ransom demands, a steady stream of fraudulent wire transfers and a large workforce operating on what are often less secure home systems are all nightmarish scenarios for cyber insurers, says CFC, the specialist insurance provider and pioneer in emerging risk.
However there are three particularly scary trends keeping cyber insurers up at night this Halloween:
1. The devastating knock-on effect of single events
IT managed services providers (MSPs) are increasingly under attack, which means the hundreds of thousands of businesses who rely on them are also being hit with hefty system downtime, in some cases the loss of sensitive data, and the negative reputational impact associated with both. What’s more, hackers are also using these providers as a staging ground to launch ransomware attacks against the many businesses MSPs serve.
2. Spine-chilling trends in ransomware
2020 hasn’t just seen ransomware cases rise in terms of frequency, it has also been the year of the most severe attacks cyber insurers have seen to date. Partly to blame is the new trend in many ransomware variants to exfiltrate data as well as encrypt it – so even if a business can successfully recover data from backups, if the ransom isn’t paid, the business will have to reckon with the regulatory costs and reputational impact of the release of sensitive data.
3. The creeping rise of cyber insurance claims
Businesses are now more reliant than ever on technology to operate, whether they are using remote networks for home-working during COVID, paying suppliers by wire transfer, or storing sensitive data online. Losses are now building against what have historically been very low prices and small portfolios for cyber insurance providers.
“All these events are conspiring to make 2020 a hair-raising year when it comes to cyber risk and as a result the cyber insurance market is entering a period of readjustment,” says CFC’s cyber development leader, Lindsey Nelson. “For an important, but still relatively unsaturated line like cyber, balancing pricing with the willingness of businesses to purchase cover will no doubt be a big challenge in 2021.”