By Ritesh Thosani, Senior Vice President, Cyber Practice Leader, Marsh India
In today’s digitally interconnected world, our dependency on online transactions for personal and business purposes exposes us to increasing cyber threats. The digital boom was further accelerated by pandemic, which increased the cyber threats. According to a survey by Barracuda Networks, an IT security firm, over 66% of Indian businesses have suffered at least one data breach since March 2020. Cyber threats are evolving at a great pace, leaving traditional insurance and risk management strategies struggling to keep pace. This creates a definitive protection gap, particularly for small and medium-sized businesses (SMBs) who are often uninsured or underinsured.
According to Munich Re Cyber Risk and Insurance Survey 2024, the Ransomware payments hit a record-breaking USD1.1 billion in 2023, and attackers are employing increasingly sophisticated methods to break into systems, exploiting technological advancements, such as generative artificial intelligence (AI). The challenging cybersecurity environment is further exacerbated by intensifying geopolitical tensions as the digital domain has become a strategic environment for states or state-sponsored actors.
Some businesses have underestimated the importance of investing in robust cybersecurity, believing they can manage without it. This misconception has been fueled by budget constraints, and lack of understanding of the true value of protection, leaves companies to potential cyber-attacks. Furthermore, businesses have also struggled to navigate the intricacies of policies and grapple with the perceived cost, further delaying crucial security measures.
The insurance industry plays an essential role in helping businesses responsibly take risks in support of society’s growth, innovation, and overall well–being — risks that are generally predictable and manageable, as opposed to those that would potentially shock the global economy or significant portions thereof.
Tailored cyber insurances are available both for individuals and businesses. These are provided through distinct policies to safeguard against the financial consequences of cyber incidents. For business needs, cyber insurance coverage includes third-party liability for privacy and data breaches, media liability claims, regulatory fines and penalties, and first-party losses like business interruption and cyber extortion. To prevent financial losses, businesses can opt for insurance coverage to cover a range of risks, such financial losses, business interruption costs, recovery expenses, and other expenses like regulatory investigation coverage, crisis management expenses and third-party legal liability coverage.
Therefore, it’s time regulators, businesses and the insurance industry join hands to build a strong cyber protection framework for India. Some progress is already happening to take the right steps towards stronger cybersecurity. The Indian Government has recently implemented a framework for the establishment of the Indian Cyber Crime Coordination Center (I4C), which is tasked with handling cybercrime issues in a comprehensive and coordinated manner. Initiatives like this, along with sufficient awareness programmes across cities, and investment in research and development will be a key differentiator in keeping ahead of the cyber security game.