Cyber Risk Assessments: How to Reduce Risk and Optimize Insurance

Companies face more cyber threats than ever before, not to mention the mounting cost of managing these exposures. However, businesses can reduce risk and optimize their insurance by using cyber risk assessments. Justin Kozak, executive vice president (EVP) of Sales at Founder Shield, sheds light on how companies can achieve this.

Read any global headlines, and you’ll quickly realize how much of a growing threat cybersecurity genuinely is. With tensions mounting overseas and hybrid work schedules being normalized, hackers are only becoming more opportunistic, executing multi-tiered attacks more devastating than ever before. However, cyber risk assessments can help companies reduce risk and optimize insurance to fit their unique situations. Let’s talk about these helpful evaluation tools and how they can benefit your growing company.

The Cybersecurity Landscape

The COVID-19 pandemic ushered in new cyber challenges from 2020 to the present. For example, new operating models — particularly remote work arrangements — undoubtedly accelerated digital transformation. But it also opened doors to new cyber threats, such as phishing or ransomware attacks. 

According to Deloitte, roughly 47% of people fall for phishing scamsOpens a new window while working from home. While the rest of us struggled to navigate the pandemic during the past few years, cybercriminals were pouncing on new vulnerabilities. These hackers exploited remote workers and capitalized on individuals’ interest in virus-related news. The following graph from Deloitte displays how cyberattacks have changed due to the global pandemic.

Source: DeloitteOpens a new window

These work-from-home mishaps frequently resulted in data breaches, often costing all-sized companies more than $130,000 per incident. Also, data breaches impacted over 500,000 individuals globally, mainly due to hackers stealing personal data from video conferencing users and selling it on the dark web.

US President Biden even recognized the growing cybersecurity issues and took action. The Biden administration hopes to cut down on ransomware attacks by tightening up the framework of cryptocurrency developments. Naturally, the focus on cybersecurity is heavily informed by global tensions; however, it’s also a wake-up call for US businesses to increase defenses. 

See More: Digital Identity – Is the Solution to Cybersecurity in Your Pocket?

Understanding Cyber Risk Assessments 

In light of recent cybersecurity developments, businesses face massive challenges in knowing how to protect themselves from cyber threats. Experts nowadays say that it’s not if a cyberattack impacts your business; it’s when. So, relying on a single line of defense or even luck to protect your assets isn’t going to cut it anymore — but there’s a better way. 

Cybersecurity is as unique as your business. Instead of merely guarding against what the headlines tell you, for example, companies must genuinely understand their exposure, it’s essential to take your own assessment. Cyber risk assessments hone in on five overarching steps:

1. Determine your company’s most valuable digital assets. 
2. Identify cybersecurity threats and vulnerabilities, internally and externally. 
3. Analyze risks to determine their potential business impact and likelihood of occurring.
4. Prioritize risks according to your company’s risk appetite.
5. Monitor cybersecurity threats and adjust risk management plans accordingly. 

There have been undeniable successful outcomes for companies willing to implement cyber risk assessments. These evaluation tools help all-size businesses identify, analyze, and evaluate risk. And that’s just for starters.

Reducing Cyber Risk

Once your risk management team has completed a cyber risk assessment, they must decide how to proceed. After all, the mountains of detailed information from these assessments are likely more than you’d ever imagined. Understanding your company’s risk appetite helps your team decide what to do with the newly-acquired data. 

Risks fall into three main categories: avoid, transfer, and mitigate. It’s not unlike the toss, donate, and keep boxes many of us use when deep-cleaning our closets. Only now, those boxes are part of an ecosystem, and old sweatshirts are digital assets — the stakes are significantly higher.

Completing a cyber risk assessment helps you focus on protecting the most valuable digital assets. Plus, it differentiates the most valuable asset from the most vulnerable, as they’re not always the same. 

There’s often too much to lose, motivating companies to avoid specific risks altogether. Other times, executives are confident they can mitigate particular threats. And some risks fall in the middle, requiring the support of another party to accept the risk. Unsurprisingly, this scenario is where the idea of optimizing your commercial insurance comes into play. 

Insuring Security and Success

Cyber risk assessments have multiple purposes. For one, they help companies carve away cybersecurity risks, informing executives and stakeholders of various threats and responses. This approach instills confidence in investors and accountability in the company’s officers and directors. Most importantly, cyber risk assessments guide companies to a more nuanced understanding of their risk landscape. This knowledge enables you to optimize your company’s cyber insurance plan more savvily. Without it, you and your risk management team are flying blind.

For example, many businesses adjust their policy limits to account for heightened or emerging cyber risks. Others take extra internal security measures to lower their risk level in the eyes of an underwriter. And others still adjust their deductibles and endorsements, not to mention paying close attention to exclusions or policy language. 

Working with a trusted commercial insurance broker is an excellent option. So, choose a partner who knows your industry and risks by heart. These seasoned professionals can guide you through a cyber risk assessment and work with you to reduce cyber risks and optimize your insurance plans. 

Have you ever implemented a cyber risk assessment? What were your learnings from it? Share with us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to know!

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