Newsletters
Risk Central
Digital EditionMajority of Business Execs Say Their Company Unprepared for Cyber Threat
A majority of business executives globally say their companies are not adequately protected against cyber attacks, suggesting that insurers can do more to provide insurance and cybersecurity services, according to a survey by Munich Re.
With global cyber premiums estimated at $14 billion in 2023 and expected to reach $29 billion by 2027, the survey highlights the disproportionately large protection gap, given the increasing frequency and severity of cyberattacks.
The survey, which included over 7,500 C-level officers from various industries and company sizes across 15 countries, aimed to better understand the challenges faced by the global business sector in terms of cyber preparedness and the requirements for appropriate cyber insurance solutions.
As digitalization advances in nearly every area of business, companies are increasingly focusing on new, smart technologies such as AI, cloud services, and data analytics. However, this growing dependence on technology has also led to a rise in vulnerabilities, security gaps, and cyberattacks.
Uncertainty around cyber protection remains prevalent, with 87% of surveyed representatives stating that their organization is not adequately protected against digital threats, up from 83% in the 2022 survey.
“There is still too high a proportion of uninsured cyber risks. Risk awareness and demand will continue to rise, also against the backdrop of a rapidly growing threat from aggressive cyber criminals, new technologies and dependencies, as well as geopolitical crises,” said Thomas Blunck, CEO of Reinsurance at Munich Re, notes,
Cyber insurance is increasingly seen as an essential part of risk management, with 41% of decision-makers surveyed considering it crucial. The survey results underscore the need for insurers to increase efforts in enhancing cyber risk transparency, making conditions more understandable, and products easier to assess. Adequate risk management is a fundamental prerequisite for cyber insurance and greater resilience, the report stated.
The level of concern regarding cyber risk varies across markets and sectors. Globally, 72% of C-level respondents are concerned or extremely concerned about cyber risk, with Spain being the most concerned market at 90% and Sweden taking a more relaxed approach at 35%. In the U.S., 68% of respondents were concerned or extremely concerned about cyber risk, and 70% of Canadian executives shared that view.
Low-threshold attacks targeting individuals and smaller companies are prevalent, causing billions of dollars in damage.
Data breach topped the list of attack vectors that have affected respondents, with 47% reporting such attacks, just ahead of online fraud (42%), followed by ransomware (30%). At least one out of every two companies has been affected by one of these three attack vectors, Munich Re noted.
Whereas the survey ranked ransomware as third in terms of attacks, Munich Re observed that ransomware was, by far, the leading cause of cyber insurance losses. Regarding ransomware attacks, 98% of C-level respondents that faced such an attack said said it had an impact on day-to-day operations of their company. In 40% of cases, the incident had an immediate impact, and in 25% a severe immediate impact on day-to-day business.
The main challenges in improving cyberthreat defense, according to survey respondents, were low security awareness among employees (46%), lack of skilled personnel (31%), and poor integration of security solutions (30%).
Meanwhile, the business potential for the insurance industry in the cyber line of business remains high, as many risks are still uninsured. Some 28% of global companies surveyed reported never having been offered cyber insurance.
As the insurance industry plays a crucial role in safeguarding the digital world, insurers must demonstrate their relevance to the resilience of the economy and society, the report emphasized.
To view the full report, visit Munich Re website. &
