As businesses and insurers become more educated about the new threats posed by cyber thieves and hackers, both sides are engaging in an escalating battle. "Some insureds have described fighting cyber risks as an arms race," explains Bill Jennings, an underwriter for Beazley Insurance Co., Inc., which focuses on writing a number of specialty insurance products in the U.S.

"The hackers improve their tools and the way they can hack into an insured's system. Insureds improve their tools and install patches, and hackers continue to improve their methods of attack."

When it comes to social engineering fraud, many people confuse this with the more traditional cyber attacks in which a person or entity tries to gain information from a company for a variety of reasons. With social engineering fraud the goal is always the same: cold, hard cash. "It's not the old idea of hackers sitting in a basement trying to crack a system," says Jennings. "The real weakness is the human element. Instead of trying to fool a computer system, I'm fooling a human being into thinking I'm a vendor, senior management or an important customer of theirs." And successful hackers can get rich quickly, leaving a target company with little recourse to recover its money.