Rapidly advancing technologies make cyber risks complex and difficult to insure against.
To complicate matters further, recent attacks show that the costs of a breach can escalate well beyond managing the fallout of lost or corrupted data. Firms need to factor in the potential damage to their reputation, physical and intellectual property, as well as disruption to business operations.
Unfortunately, many businesses aren’t doing enough to manage cyber risks, according to Swiss Re's latest sigma report “Cyber: getting to grips with a complex risk.” A dedicated cyber insurance market is developing rapidly, but so far the scope of cover is modest relative to potential exposure.
|Managing a complex risk
Dedicated cyber insurance typically provides core protection against data and network security breaches and associated losses, with capacity limits in the market today ranging from around $5 million to $100 million. However, some significant cyber-related risks remain largely uninsured and the scale of existing cover is modest relative to companies' overall potential exposures. Many firms are looking to transfer cyber risks to third parties better-placed to absorb them.
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