Cyber plans don’t cover many of the losses finance chiefs think they do.
Most senior finance executives at large companies believe that cyber insurance would cover most or all of the losses incurred in a cyberattack, a new study says. In a study of 105 CFOs and other senior financial executives at companies with revenue of at least $1 billion, performed by CFO Research, 45% said they expected their insurer would cover “most” related losses from a cybersecurity event, and 26% said they expected the carrier to cover “all” related losses. But most of the effects these financial executives expect to experience in a substantial cybersecurity event aren’t typically covered by insurance policies.
The survey participants were on target with their top response, “New costs to mitigate the loss.” Many new costs including expenses related to restoring data or equipment are cover by first-party cyber insurance or property insurance, according to FM Global. And third-party insurance can cover litigation and customer notification costs.
But the rest of the costs listed in the study would likely be absorbed by the victimized company. Moreover, more than half of the survey participants said financial recovery from a substantial cybersecurity event would take months, quarters, or years.
“As essential as cyber insurance is, the findings indicate financial executives may be deriving a false sense of security from it,” says Kevin Ingram, the insurers CFO. “That’s why were committed to helping our clients prevent loss in the first place.”
FM Global or Microsoft MSP’s provide a cyber-risk assessment tool that identifies addressable vulnerabilities in physical security, information security, industrial controls, and building automation systems.
The company notes that responsibility for cybersecurity no longer falls exclusively on a single department. “From supply chains and infrastructure to facilities and data, risk managers must now deal with cyber-based threats that potentially affect an entire business, enterprise-wide”, FM Global wrote in a separate report. “And the more businesses depend upon data and technology, the more exposed to cyber-induced business interruption they become.”
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