As one of the largest insurance markets, Lloyd’s of London, has recently seen a rapid increase in demand for cyber insurance and are warning warning businesses to protect their systems and make safeguarding against cyber attacks their top priority after news of a Russian hacker stealing £650 million from banks around the world over the course of two years.
Inga Beale, chief executive of Lloyd’s said she is aware of the threat that cyber risks can pose and is preparing her clients for the possible challenges they could be faced with. “Cyber risk poses the most serious threat to businesses and national economies, and it’s an issue that’s not going to go away. The London market has a long, proud history of finding innovative solutions to insuring large, complex risks that are challenging to underwrite locally.”
According to underwriting manager for cyber, technology and media at Lloyd’s syndicate Barbican, Geoff White, the market for cyber insurance has experienced a 50% increase in insurance submissions during the first three months of this year, in comparison to the same period in 2014.
White says the company are “continuing to see new customers purchasing cyber insurance and existing customers purchasing higher limits following recent high profile attacks.”
Lloyd’s is a leading specialist for insurance that operates in over 200 countries worldwide and is often the first to insure new, unusual or complex risks.
In a recent in-depth report issued by Lloyd’s called ‘Managing Digital Risk: Trends, Issues and Implications for Business’, they outlined five ways risk managers can help a business to respond to growing digital threats.
- Risk managers should set up a working group of technology experts and key stakeholders to monitor and review the exposure of the business to digital threats and keep boards regularly informed.
- Risk managers should become more involved in IT governance and strategy by working closely with IT stakeholders and decision makers of the business.
- Risk managers should ensure that recommended applicable standards and frameworks are used to help manage digital risks and look for new best practice guidance for more unusual problems.
- Risk managers should be aware that traditional insurance policies will not cover digital risks and consider risk transfer solutions as part of their overall digital risk management strategy.
- Risk managers should shape research around digital risks and help researchers to understand the challenges in making effective and practical decisions around cyber risk.
The guidelines that Lloyd’s have outlined in their report are a good start to managing cyber risk, however, it is worth mentioning that as technology changes and cyber-attacks increase, risk management should also change so that businesses remain protected and secure.