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New Cyber Liability Study Reveals Risk Management Trends, Insights

New Cyber Liability Study Reveals Risk Management Trends, InsightsNew Cyber Liability Study Reveals Risk Management Trends, Insights

An insurer-sponsored study conducted of risk managers, insurance buyers, and other risk professionals across an array of industries for 2012 revealed that board members and those in executive management positions are increasingly recognizing the risks of a wide range of cyber exposures. These exposures include lost or stolen data, violation of privacy laws, intellectual property infringement, social media, mobile devices, BYOD (Bring Your Own Device), and cloud computing.

While risk managers have been recognizing these exposures for some time now, the new study showed an uptick from 2011 among board members and C-Suite Executives who view cyber risks as significant threat to an organization (up 7.1% from last year).

Smaller companies – those with revenues less than $250 million – don’t take cyber risks as seriously as their largest counterparts (those with revenue greater than $10 billion, according to the survey. This holds true even though smaller companies are indeed vulnerable.

Privacy Violation/Data Breach of Customer Records Biggest Concern

Among the survey’s respondents, the biggest risk concern involves privacy violation as a result of data breaches, with more than 63.6% rating this exposure a 4 or 5, with 5 being the highest risk. An organization’s reputational damage due to a data breach followed as the second highest risk concern. Business interruption due to supplier cyber disruptions ranked at the low-end of risk concerns.

The research also indicated, not surprisingly, that those companies with a comprehensive disaster response plan prior to a breach occurring fared far better than those without a plan. It seems all the publicity about high-profile breaches has spurred organizations to put disaster plans in place, as 80.4% said that they have a one, which is a 12.4% increase from 2011.

In addition, most companies are starting to see the benefits of having everyone throughout the organization involved in helping to mitigate risks. When asked if they had a multi-departmental information security risk management team or committee, 61.4% of survey participants said “yes” compared to the 57.2% who responded “yes” last year.

Going Mobile and in the Cloud

The survey also asked questions regarding the participants’ security policy as it related to mobile devices and cloud computing. Among the participants, 74.8% said they had a mobile device security policy, 14.6% said no, and 10.6% were not sure. When it came to security regarding employees who use their own device for business purpose, 36.2% have a policy in place, 39.6% do not, and 24.2% didn’t know.

As cloud computing gains popularity more companies are implementing data security risk management to protect information that is stored on a third-party server…although not enough of them. Only 38.7% have a policy in place, with 19.2% saying “no”, and nearly 28% not knowing.

The survey also showed that, although cyber risks are recognized as a risk threat, less than 50% of the organizations in the survey purchased cyber liability or privacy coverage. This number is indeed on the rise – from 35.1% in 2011 to 43.9% in 2012 – but, unfortunately, many businesses are still leaving themselves vulnerable to cyber exposures.

Axis Insurance Services provides privacy coverage to many organizations – large and small – and will be happy to discuss the various exposures all companies face and how you can help mitigate these risks. Call us to make sure you have the proper protection against these risks. (877) 787-5258

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Blogged on: December 5, 2012 by Mike Smith
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