The Cyber-Risk Challenge

Almost every business today, regardless of size or location, relies on digital technology and uses it to run their businesses, monitor stock, design products, communicate and store customer data. But while digital technologies help companies become more efficient, reduce their costs and develop new markets, it also makes them more vulnerable to cyber-attacks.

According to a recent survey by Lloyds of London 92% of European respondents said their company had suffered a data breach in the past five years, while 3% said they had “come close”. Only 5% said they had not suffered a breach or were unaware that they had. In spite of cyber attacks becoming common the survey found 73% of business leaders have a limited knowledge of cyber insurance and 50% don’t know that cyber cover for data breaches is available.

In 2018 the European Union is introducing the General Data Protection Regulation (GDPR) which will set rigorous requirements for any business that deals with European Consumers’ data. NIBA CEO Dallas Booth believes that Australia will also do something similar in the near future.

Booth says “My expectation is that Australia will introduce laws requiring the mandatory reporting of data breaches within the next 18 months. This proposal has been under discussion for some time now. If/when this occurs, it will be critical that insurance brokers are able to discuss the risk and threat of cyber attacks with their clients, and be in a position to offer advice and assistance with the challenges businesses will face. As the Lloyd’s report points out, no business is immune from the reality of cyber attacks and data breaches.”

Businesses face a constantly evolving landscape of cyber threats and cyber risk is one of the most pertinent risks in today’s day and age. The introduction of the updated regulation to protect consumers will increase the focus on the data security aspect of company operations, because regulators, shareholders and customers will use it to hold companies accountable to higher cyber security standards.