Allianz Global has published some cyber risk analysis and it’s pretty detailed. Ransomware remains a top cyber risk for organizations globally while business email compromise incidents are on the rise and will increase further in the ‘deep fake’ era.
At the same time, the war in Ukraine and wider geopolitical tensions are a major concern as hostilities could spill over into cyber space and cause targeted attacks against companies, infrastructure or supply chains, according to a new report from Allianz Global Corporate & Specialty (AGCS).
The insurer’s annual review of the cyber risk landscape also highlights the emerging threats posed by the growing reliance on cloud services, an evolving third-party liability landscape that means higher compensation and penalties, as well as the impact of a shortage of cyber security professionals. Such potential vulnerabilities mean that today a company’s cyber security resilience is scrutinized by more parties than ever before, including global investors, meaning many firms now rank it as their major environmental, social, and governance (ESG) risk concern, the report notes.
Around the world, the frequency of ransomware attacks remains high, as do related claims costs. There was a record 623 million attacks in 2021, double that of 2020. Although frequency reduced by 23% globally during the first half of 2022, the year-to-date total still exceeds that of the full years of 2017, 2018 and 2019, while Europe saw attacks surge over this period. Ransomware is forecast to cause $30bn in damages to organizations globally by 2023. From an AGCS perspective, the value of ransomware claims the company was involved in together with other insurers, accounted for well over 50% of all cyber claims costs during 2020 and 2021.
Double and triple extortion now the norm
“The cost of ransomware attacks has increased as criminals have targeted larger companies, critical infrastructure and supply chains. Criminals have honed their tactics to extort more money,” Says AGCS. “Double and triple extortion attacks are now the norm – besides the encryption of systems, sensitive data is increasingly stolen and used as a leverage for extortion demands to business partners, suppliers or customers.” Ransomware severity is likely to remain a key threat for businesses, fueled by the growing sophistication of gangs and rising inflation, which is reflected in the increased cost of IT and cyber security specialists.
Increasingly, smaller and mid-sized companies which often lack controls and resources to invest in cyber security are being targeted by gangs as larger businesses invest more heavily in security. Gangs are also using a wide range of harrassment techniques, are tailoring their ransom demands to specific companies and are using expert negotiators to maximize returns.
Business email compromise (BEC) attacks continue to rise, facilitated by growing digitalization and availability of data, the shift to remote working and, increasingly, ‘deep fake’ technology and virtual conferencing. BEC scams totalled $43bn globally from 2016 to 2021 according to the FBI, with a 65% spike in scams between July 2019 and December 2021 alone. Attacks are becoming more sophisticated and targeted with criminals now using virtual meeting platforms to trick employees to transfer funds or share sensitive information. Increasingly, these attacks are enabled by artificial intelligence enabling ‘deep fake ‘audio or videos that mimic senior executives.
Last year, a bank employee from the United Arab Emirates made a $35mn transfer after being misled by the cloned voice of a company director.
The threat of cyber war
The war in Ukraine and wider geopolitical tensions are a major factor reshaping the cyber threat landscape as it increases the risk of espionage, sabotage and destructive cyber-attacks against companies with ties to Russia and Ukraine, as well as allies and those in neighboring countries. State-sponsored cyber acts could potentially target critical infrastructure, supply chains or corporations.
“As yet the war between Russia and Ukraine has not led to a notable uptick in cyber insurance claims, however it does point to a potentially increased risk from nation-states,” AGCS explains. Although acts of war are typically excluded from traditional insurance products, the risk of a hybrid cyber war has accelerated efforts in the insurance market to address the issue of war and state-sponsored cyber attacks in wordings and provide clarity of cover for customers.
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