Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions

Survey: Financial Services Firms to Boost Cyber Security Budgets


Survey Financial Services Firms to Boost Cyber Security BudgetsIncreased Spending for Cyber Protection Underscores Ongoing Threat

According to a new survey by accounting and consulting firm PricewaterhouseCoopers (PwC), financial-services companies plan to bolster their cyber security budgets by about $2 billion over the next two years in an effort to combat hackers. Joe Nocera, a technology-consulting partner at PwC, who worked on the study, said the spending at the 758 companies would likely rise 10% to 20% annually in coming years, leading to $1.3 billion to $2.6 billion in additional spending by 2016.

The spending increase is no surprise when you read headline after headline with everyone from big-box retailers like Home Depot and Target to the U.S. Postal Service and others being hit by major data breaches. Banks and investment firms are particular targets, attacked frequently, because of the vast sensitive client data they handle. According to the PwC report, overall the number of financial firms reporting losses of more than $10 million from cyber security incidents increased more than 140% from a year ago. Moreover, financial-services companies accounted for 34% of all breaches in 2013, almost three times the percentage of the public sector, which garnered the next highest reading, according to the Verizon 2014 Data Breach Investigation report.

The most highly publicized data breach at a financial firm was JPMorgan’s data breach, which occurred in June and was detected in August. Seventy-six million households and seven million small businesses had been affected by the JP Morgan breach.

“The prevalence of attacks, even at banks with some of the most sophisticated network security, means more work needs to be done to mitigate cyber risk, said Paul Tiao, a partner at Hunton & Williams LLP and former adviser to the director of the Federal Bureau of Investigation, in an article published earlier this year in Bloomberg.

In fact, in an Oct. 30 research report, Wells Fargo & Co. predicted all companies will accelerate their cyber security spending by a “low- to mid-teens” percentage over the next two years. For its own operations, San Francisco-based Wells Fargo spends roughly $250 million a year on cyber security and has increased staffing in the area by 50%, a person familiar with the matter has said.

The money spent by banks involves everything from higher salaries for cyber security executives to more consultants and programs that are more resistant to hackers. Firms are also spending money to minimize the damage of hacks when they do happen. JPMorgan after their breach announced that by the end of this year will have about 1,000 people focused on cyber security. The bank is also working on building and running three cyber security operations centers.

Along with increased cyber security measures is the importance of a responsive Cyber Liability insurance plan to help cover the costs involved in data breaches. Some of these costs can involve:

  • Conducting investigations and forensics to determine the root cause of the data breach
  • Determining the probable victims of the data breach
  • Organizing the incident response team
  • Conducting communication and public relations outreach
  • Preparing notice documents and other required disclosures to data breach victims and regulators
  • Notifying customers of breach with a letter or via outbound telephone call, email
  • Activities to help victims of a breach communicate with the company to ask additional questions or obtain recommendations in order to minimize potential harms
  • Legal services for defense
  • Legal services for compliance
  • Identity protection services
  • Lost customer business based on calculating customer churn or turnover

There also may be the costs related to lost business opportunities as a consequence of negative reputation effects after the breach has been reported to victims (and publicly revealed to the media).

Talk to the cyber experts at Axis Insurance Services about what type of Cyber Liability/Privacy & Network Security insurance plan your financial services firm requires to help mitigate the costs involved in the event of a breach. Call us at (877) 787-5258 and one of our professionals can review the various policies and custom programs we can put together.

 

Comments

comments

Blogged on: November 26, 2014 by Mike Smith
Error Omissions
Error Omissions
Submit your information below so we can contact you with a FREE quote
[All fields are required.]
Actual Annual Revenue:
Verify:
=
I have read and agreed to theTerms & Conditions
Error Omissions
Error Omissions