Lower Data Breach Insurance Costs with These Tips
The changing attack landscape has resulted in the hardening of the data breach insurance market. Gain insight into how implementing security controls can reduce the mean time to detect and control the costliness of an attack.
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The proliferation of ransomware and business email compromise (BEC) cyberattacks has forced organizations to change their perception towards the current threat environment. The question is no longer “if” your business will fall victim to a threat campaign, it’s now a matter of “when.”
IBM’s Cost of a Data Breach Report 2023 reported a 2.3% increase from the 2022 cost of USD 4.35 million, bringing the total to USD 4.45 million. The financial impact of a cyberattack hasn’t just placed security teams on the defense, it’s affected the entire data breach insurance market.
The 2022 NetDiligence Cyber Claims Study analyzed over 7,400 claims between 2017 – 2021. In comparison, the sixth Cyber Claims Study published in 2016 analyzed fewer than 200 cyber insurance claims. While losses varied enormously (smallest claims were less than USD 1,000 and the largest are over USD 300 million), there was no correlation between the size of the organization and the magnitude of a cyber-related loss.
The consensus is that the longer an attack goes undetected, the more expensive it is to remediate. According to IBM Security, the average time to identify and contain a data breach was 277 days. But a shorter data breach lifecycle of less than 200 days was associated with an average of 23% in cost savings. Keeping in mind that not all policies cover the entire claim amount, it’s evident that no matter the size of an organization, implementing specific security controls to reduce the time to contain an attack is key to mitigating the rising costs of data breaches.
What are the costliest breaches?
Ransomware and BEC were among the leading causes of loss. Nearly 25% of destructive attacks that left systems inoperable involved ransomware. While 2022 saw a decrease in the average cost of a ransomware attack, 2023 saw a notable increase of 13%. This does not include the price to pay out the ransom itself, and it is still higher than the average total cost of a data breach.
BEC accounted for 9% of breaches—up from 6% in 2022—and cost an average of USD 4.67 million. This high cost is due to the length of time to identify contain (266 days).
What are the most popular cyber insurance claims?
It’s no surprise that ransomware and BEC were the two leading causes of cyber insurance claims. NetDiligence reports the combined tactics accounted for 44% of claims during the five-year period from 2017-2021, and nearly 50% of claims in 2020 and 2021. Of the 2,123 ransomware claims recorded, 45% occurred over the past two years. And out of 1,153 BEC claims reported between 2017-2021, a whopping 57% of the total occurred in 2020 and 2021.
Reducing costs comes from reducing risk
While data breach insurance is designed to mitigate the financial damage of a cyberattack, claims potentially only negate a fraction of costs associated with ransomware and BEC. Keeping in mind the “if not when” credo of cyberattacks, the most effective way for organizations to control the costliness of an attack is by reducing the mean time to detect by implementing the following four security controls:
AI and automation
In the 2023 report, less than one-third of organizations used security AI and automation in their security operations. With the recent boom in generative AI-powered security tools, businesses should seize the opportunity to significantly improve their efficiency and accuracy while reducing breach costs. IBM reported that teams extensively using AI and automation delivered nearly USD 1.8 million in data breach cost savings as well as reduce the mean time to contain by over 100 days.
Incident response services
Historically, implementing strong incident response teams and regularly testing incident response plans significantly reduced the cost of a data breach. Those poised and equipped to detect, respond, and eliminate cyberattacks through incident response teams with a tested incident response plan experience average breach cost savings of USD 1.49 million. They also resolved incidents 54 days faster compared to organizations with low levels of IR planning and testing.
Learn more: Incident Response Services & Playbooks Guide
Attack Surface Management
The benefits of attack surface management (ASM) are staggering; organizations with the ability to discover, assess, and mitigate vulnerabilities across their attack surface were able to identify and contain data breaches nearly 100 days faster.
Extended detection and response (XDR) and operationalizing Zero Trust are essential to a strong ASM solution. By revealing the entire chain of events across security vectors—including email, endpoints, servers, cloud workloads, and networks—XDR simplifies and accelerates investigation and response. Zero Trust is an extension of the principle of leas privilege, wherein any connection (from within the network or not) should be considered untrustworthy.
Tying it all together: XDR establishes a solid foundation for verifying and establishing trust. And since it continuously collects and correlates data, it fulfils the continuous assessment pillar of the Zero Trust strategy.
Learn more: Attack Surface Management Strategies
Partnering with a data breach insurance provider can help mitigate the damage incurred by some of the most popular and costliest breaches: ransomware and BEC. Organizations need to go one step further towards reducing the cost of data breaches and the likelihood of making a cyber insurance claim that is larger than your policy amount. Mitigating both cyber risk and financial loss begins with leveraging AI and automation, ASM, and establishing strong incident response processes.