Business interruption due to a breach is top cyber risk concern: Aon Global Cyber Benchmarking Report
The costs of business interruption due to a breach is the top cyber risk concern for businesses across all industries, according to the 2016 Captive Cyber Survey report just released by Aon, the leading global provider of risk management.
Aon’s first cyber captive survey offers a better understanding of organisations’ current attitude towards cyber threats, risk assessment, insurance purchasing trends and loss adjustment concerns, and provides insight into current retail market trends, including captives and other risk financing solutions.
Aon’s findings also indicate that there is a disparity between companies recognising that cyber is one of the fastest growing and permeating risks, and actually understanding what their individual exposures and coverage needs are. Captives are a great alternative risk transfer solution for bridging this gap while the industry’s approach to cyber risk management catches up to the evolving pace of technology.
The survey findings indicated that 94 percent of companies would share risk with others in their industry as part of a captive facility writing cyber. What’s more, Aon experts anticipate alternative risk transfer options to become increasingly sought after, as these solutions give companies some control over underwriting, coverage scope and claims adjustment, while providing an opportunity to share best practices, experience and data in a private setting.
Additional highlights include:
· 60 percent of large companies don’t buy cyber insurance.
· Of those that do, 68 percent of companies surveyed buy cyber for balance sheet protection closely followed by ensuring due diligence comfort for the board.
· Only 25 percent of respondents that buy limits are confident that they comply with international best practices and standards for information security governance.
· 95 percent of companies state clear policy wording as the most important issue in the cyber risk market, and 75 percent of large companies express concerns about the loss adjustment process.
Given the evolving nature and complexity of cyber exposures, Aon found that the use of cyber risk assessments is surprisingly low. Conducting such an assessment is a useful tool for improving risk understanding and maturity as well as helping organisations better prepare for potential business interruption during or after a breach. Aon is at the forefront of assisting clients to develop and implement a risk assessment approach that is cross-departmental and can translate cyber exposures into financial impact.
Aon recommends the following three steps to begin a cyber risk assessment:
1. Scenario Analysis: Benchmark the existing cyber risk profile and work with business stakeholders to prioritise cyber risk scenarios.
2. Financial Modeling: Leverage advanced financial simulation tools using deterministic modeling to quantify first and third party costs of select cyber scenarios. Consider performing an analysis on non-damage business interruption scenarios using forensic accounting capabilities.
3. Insurability Risk Review: Test the adequacy of limits against the assessed cyber risk as well as review the optimisation of the proposed insurance program.
About the 2016 Aon Captive Cyber Survey
Aon’s 2016 Captive Cyber Survey is designed to offer analysis on top cyber risk concerns, risk assessment approaches, attitudes toward cyber insurance and policy cover and structure. The survey, conducted for the first time in fall 2015, gathered input from risk managers and directors of more than 125 captive insurance companies. The 2016 findings will allow organisations to gain insight into the mounting threat of cyber risk, benchmark their risk management practices and identify approaches that may increase their preparedness.
For more information, contact Deidre Beylis at [email protected] or +27 11 894 2767
Aon South Africa is a leading provider of risk management services, insurance and reinsurance broking, employee benefits solutions and specialty insurance underwriting. The company employs more than 800 professionals in its 14 offices in South Africa with its head office in Sandton, Johannesburg.
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Aon plc (NYSE:AON) is a leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72 000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global and principle partnership with Manchester United.