Tag Archives: Cyber Risks

Ransomware: Is Cyber Insurance On Your Radar?

Hotel guests locked out of their rooms at a four-star hotel in the Austrian Alps? Washington DC’s CCTV system disrupted days before Donald Trump’s inauguration? Libraries in St Louis brought to a standstill? Eight years of digital evidence lost by a Texas police department?

Ransomware is not just grabbing headlines, it’s now the favorite method of cyberattack used against businesses, particularly in North America and Europe, according to this Malwarebytes report.

In the fourth quarter of 2016 alone, Malawarebytes catalogued nearly 400 variants of ransomware, and 81 percent of ransomware detected in corporate environments occurred in North America.

Lloyd’s insurer Beazley saw ransomware attacks quadruple in 2016 and projects them to double again in 2017.

“Evolving ransomware variants enable hackers to methodically investigate a company’s system, selectively lock the most critical files, and demand higher ransoms to get the most valuable files unencrypted.”

In its white paper Cyberrisk: Threat and Opportunity, the Insurance Information Institute reports that insurers are issuing an increasing number of cyber insurance policies and coverage for cyber extortion, including payment of a ransom following a ransomware attack, is available.

According to the FBI, ransomware attacks are on the up, particularly targeting organizations because the payoffs are higher.

How To Cover Electronic Aggression, or Cyberbullying

Recent events have reminded us that cyberbullying is not limited to children, with at least one survey indicating that 73 percent of adult internet users have seen someone harassed online, while 40 percent have personally experienced it.

For example, professional golfer Paige Spiranac last week spoke about the harassment she and her family experienced following her professional debut last year. The recent U.S. Presidential campaign has also highlighted the increasing prevalence of cyberbullying that targets adults.

Electronic aggression is the definition used by the Centers for Disease Control and Prevention (CDC) to describe any type of harassment or bullying that occurs through email, a chat room, instant messaging, a website (including blogs), or text messaging.

And the National Conference of State Legislatures (NCSL) defines cyberbullying as the willful and repeated use of cell phones, computers, and other electronic communication devices to harass and threaten others.

NCSL notes that cyberbullying differs from more traditional forms of bullying in that it can occur at any time, its messages and images can be spread and shared instantaneously to a wide audience, and perpetrators can remain anonymous, often making them difficult to trace.

Adult cyberbullying often takes the form of trolling where someone posts inflammatory messages in an online platform, such as on Facebook, or Twitter or in a chatroom or blog, with the sole intent to provoke a reaction from other users.

While there are many examples of cyberbullying against celebrities or public figures, any adult who uses the internet is increasingly at risk.

Social media platforms, including Instagram, Twitter and Facebook have responded by introducing new tools aimed at combating cyberbullying.

Just as technology is changing the way we interact with each other, so insurers have been moving to provide insurance coverage that can mitigate the financial loss and emotional harm suffered as a result of a cyberbullying incident.

For example, earlier this year Chubb made cyberbullying coverage available to its U.S. homeowners customers. The coverage provides up to $60,000 in compensation to clients and family members for expenses related to harassment and intimidation committed via personal computers, telephones or mobile devices. It can help mitigate the cost of wrongful termination, false arrest, wrongful discipline in an educational institution, or diagnosed debilitating shock, mental anguish or mental injury.

From the perspective of businesses, most traditional commercial general liability policies would not cover electronic aggression or cyberbullying claims. Specialist media liability policies developed by insurers may cover social media activities and industry experts say the number of insureds and insurance brokers looking at this type of coverage is increasing.

Specialized cyber policies developed by insurers may also be tailored to incorporate social media coverage. Check out the Insurance Information Institute white papers Cyber Risk: Threat and Opportunity and Social Media, Liability and Risks for more on this topic.

Prepared for #CyberMonday and #GivingTuesday?

With Cyber Monday and Giving Tuesday rounding out the Thanksgiving holiday digital spending and giving are expected to reach record levels, which means businesses and individuals need to be prepared for cyber threats.

In 2015, Cyber Monday was the largest e-commerce sales day ever with online orders totaling $3.07 billion and experts expect this year’s total will be higher still, according to a post on the The U.S. Chamber of Commerce’s Above the Fold blog.

It cautions businesses to be vigilant, especially when it comes to payment card protection, and offers the following tips:

—Change your passwords and make them strong: just as you would lock the doors before leaving, lock this door too. Make sure employees know this too.

—Install software updates known as patches that your payment service provider sends you for your payment systems: install updates, just as you would on your phone, so your payment system is protected.

—Keep business information private: keep passwords, user IDs, or other details for payment systems private. Confirm an unexpected call or email separately with the supposed caller or sender before proceeding.

Even digital philanthropy can bring out cybercriminals. According to the Identity Theft Resource Center (ITRC), in recent years there has been substantial growth in web-based giving or mobile donations.

In fact one of the first global-scale events that brought attention to mobile donations was the 2010 hurricane that struck Haiti. The Red Cross received millions of dollars in donations from cellphone users who simply texted the word “HAITI” to a five-digit number.

While it feels good to give, the ITRC says it’s important to remember to do your homework and check out a charity before clicking on a link or responding to potentially fraudulent email requests claiming to be a part of Giving Tuesday.

One cause you might consider supporting is The Insurance Industry Charitable Foundation’s Early Learning Initiative (ELI) which provides an opportunity for every young child – regardless of means – to learn to read and write.

Join your insurance industry colleagues in the worldwide #GivingTuesday movement by contributing $5 for ELI here.

Check out the Insurance Information Institute’s facts and statistics on corporate social responsibility here. The I.I.I. white paper Cyberrisk: Threat and Opportunity has the latest information on the current exposure and how insurers are responding.

Cybersecurity and the Presidential Election

Insurance leaders say the upcoming U.S. presidential election could impact a range of issues, including healthcare and international trade.

Cybersecurity is another insurance-related issue that next week’s election is likely to impact. Forrester even predicts that the new U.S. president will face a major cybercrisis within 100 days.

A new Insurance Information Institute (I.I.I.) white paper notes that governments are facing an unprecedented level of cyber attacks and threats with the potential to undermine national security and critical infrastructure.

The I.I.I. paper, Cyberrisk: Threat and Opportunity, also highlights rising concerns over how hacked information may be used to influence a political outcome:

“Hacks of both Democratic National Committee and Republican National Committee emails during an election year have raised concerns that groups are attempting to influence the outcome of the 2016 U.S. presidential campaign.”

Just last Friday U.S. government officials accused Russia of trying to interfere in the 2016 elections, including by hacking the DNC computers and other U.S. political organizations.

And on Tuesday Microsoft said the Russian hackers believed responsible for hacking the DNC computers had exploited previously undisclosed flaws in its Windows operation system and Adobe’s Flash software.

The Wall Street Journal reports that apparent Russian attempts to disrupt the U.S. election highlight more mundane risks as well as a new weapon in information wars: the disclosure of hacked information to influence policy or public perception.

Meanwhile, cybersecurity experts have warned that the election systems in the U.S. are vulnerable at the local, state and manufacturer level.

The mounting concerns have prompted the Department of Homeland Security (DHS) to consider whether the U.S. voting systems should be classified as critical infrastructure.

Currently, there are 16 critical infrastructure sectors, such as the U.S. power grid and water supply, whose systems and networks are considered so vital to the U.S. that their incapacitation or destruction would have a debilitating effect on national security and public health or safety.

In fiscal year 2015, there were around 295 attacks on critical infrastructure control systems in the U.S., a 20 percent increase on the previous year, according to DHS figures cited in the I.I.I. paper.

What IoT Cyber Attacks Mean for Insurers

The massive global distributed denial of service attack (DDoS) against internet infrastructure provider Dyn DNS Co. that left over 1,000 major brand name sites including Twitter, Netflix, PayPal and Spotify, inaccessible Friday has implications for insurers too.

While the nature and source of the attack is under investigation, it appears to have been (in the words of Dyn chief strategy officer Kyle York) “a sophisticated, highly distributed attack involving tens of millions of Internet Protocol addresses.”

As Bryan Krebs’ KrebsOnSecurity blog first reported, the attack was launched with the help of hacked Internet of Things (IoT) connected devices such as CCTV video cameras and digital video recorders (DVRs) that were infected with software (in this case the Mirai botnet) that then flooded Dyn servers with junk traffic.

The World Economic Forum (WEF) recently warned that failing to understand and address risks related to technology, primarily the systemic cascading effects of cyber risks or the breakdown of critical information infrastructure could have far-reaching consequences for national economics, economic sectors, and global enterprises.

As the IoT leads to more connections between people and machines, cyber dependency will increase, raising the odds of a cyberattack with potential cascading effects across the cyber ecosystem, the WEF noted.

While IoT connected devices have the potential to transform how businesses and individuals—and their insurers—conduct, manage and monitor their operations, workplaces and their homes, clearly there are embedded risks that insurers need to consider.

Over at Celent’s insurance blog, Donald Light, director of Celent’s North America property/casualty practice, says the Dyn DDoS attack has a number of potentially serious implications for insurers.

Light writes:

“An insurer with a Connected Home or Connected Business IoT initiative that provides discounts for web-connected security systems, moisture detectors, smart locks, etc. may be subsidizing the purchase of devices which could be enlisted in a botnet attack on a variety of targets. This could expose both the policyholders and the insurer providing the discount to a variety of potential losses.”

If the same type of safety and security devices are disabled by malware, homeowners and property insurers may have increased and unanticipated losses, Light suggests.

The Insurance Information Institute white paper on cyber threats and opportunities is available here.

Cyber Claims Costly To Businesses Large and Small

Data breaches can be costly, no matter how large or small an organization may be.

That’s a key takeaway of the latest NetDiligence study on cyber claims costs that analyzed 176 data breach claims submitted by insurers.

While the average claim for a large organization—at $6 million—was 10 times the average claim for a small organization, some of the largest claims in this year’s study came from smaller organizations with revenues of $2 billion or less.

This year’s dataset included 21 claims in excess of $1 million (12 percent) of which 81 percent (17 out of 21) involved nano-, micro- and small-revenue organizations that were victims either of hackers or malware.

The largest legal costs (defense and settlements) in this year’s study were from two micro-organizations (revenues of $50 million to $300 million). One lost valuable trade secrets to a hacker, while the other exposed protected health information due to a lost laptop.

The combined legal costs for these two organizations ranged from $1.5 million to more than $4.5 million, NetDiligence said.

Interestingly, the average claim payout across the dataset was $495,000, while the median claim payout was $49,000

The highest average claim payout—$1.3 million—was in the financial services sector.

The majority of claims (87 percent) submitted for analysis in this year’s study came from smaller organizations with revenues of $2 billion or less.

NetDiligence said this is in line with previous findings that smaller organizations experience most of the incidents. This is likely due to the fact that there are simply more small organizations, than large ones.

Other contributing factors may be that smaller organizations are less aware of their exposure or they have fewer resources to provide appropriate data protection and/or security awareness training for employees, NetDiligence said.

A point that underscores the growing need for smaller companies to purchase cyber insurance.

While many leading cyber liability insurers are participating in the study, NetDiligence noted that there are many insurers that have not yet processed enough cyber claims to be able to participate.

“It is our sincerest hope that each year more and more insurers and brokers will participate in this study—that they share more claims and more information about each claim—until it truly represents the cyber liability insurance industry overall.”

Cybersecurity Among Biggest Presidential Challenges

Just days after the disclosure of a massive data breach at email provider Yahoo, believed to have been the work of a state-sponsored actor, it’s notable that cybersecurity made news during the first of three U.S. presidential debates last night.

As Democratic U.S. presidential nominee Hillary Clinton and Republican U.S. presidential nominee Donald Trump squared off, moderator Lester Holt, asked:

“Our institutions are under cyber attack, and our secrets are being stolen. So my question is, who’s behind it? And how do we fight it?”

In her response, Clinton described cybersecurity, cyber warfare as one of the biggest challenges facing the next president.

She said the U.S. faced two different kinds of adversaries: independent hacking groups that try to steal information so they can use it commercially to make money; and cyber attacks coming from states and organs of states.

Clinton noted:

“We need to make it very clear—whether it’s Russia, China, Iran or anybody else—the United States has much greater capacity. And we are not going to sit idly by and permit state actors to go after our information, our private sector information or our public sector information.”

Trump and Clinton then went back-and-forth on whether Russia was responsible for the hacking of Democratic National Committee emails earlier this year.

Setting that discussion aside, both nominees appeared to agree on the enormity of the cybersecurity challenge, as Trump said:

“We have to get very, very tough on cyber and cyber warfare. It is — it is a huge problem… The security aspect of cyber is very, very tough. And maybe it’s hardly doable.”

The just-disclosed 2014 Yahoo breach, in which 500 million accounts were compromised, highlights concerns around the number of state-sponsored cyber attacks, according to this article by the Wall Street Journal.

While organizations should consider the purchase of cyber insurance to manage the financial consequences of an attack, a 2015 Ponemon study found that a more popular approach to managing the risk of a nation state attack is a government-subsidized insurance policy (see below).

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What do you think?

Some 17,475 IT and IT security practitioners located in all regions of the U.S. participated in the Ponemon survey.

The Insurance Information Institute’s latest white paper on cyber risk threats and challenges is available here.

Faster Decisions, Fewer Challenges Among Cyber Buyers

Good news for cyber insurers. A majority of companies continue to have network security and data privacy insurance, and are making their purchase decisions faster and experiencing fewer purchasing challenges than in 2015.

The findings come in the newly-released 2016 Network Security and Data Privacy Study by Wells Fargo Insurance.

While in 2015 the study showed that 22 percent of companies buying insurance took more than 12 months to make the purchase decision, in 2016 just 8 percent of companies are currently taking that long, while 59 percent are taking six months or less.

Cost of coverage and finding a policy that meets a company’s needs remain the top two insurance purchasing challenges of 2016. However, the study found that 19 percent of companies did not experience any purchasing challenges, a significant improvement over 2015 when only 6 percent did not experience challenges.

The easier purchasing process may be related to less internal resistance, Wells Fargo said. Likewise, in 2016, fewer companies (24 percent) believed the risk was not big enough to warrant the purchase of network security and data privacy insurance.

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Of the companies in the study that had purchased insurance, one-fifth reported filing a network security and data privacy insurance claim in the last 12 months, and most were satisfied with their coverage.

Another key takeaway for cyber insurers? Protecting the business against financial loss was the primary reason for purchasing coverage (81 percent) in 2016, as in 2015. However, protecting the company’s reputation is an increasing concern, with 70 percent citing it in 2016, compared to just 58 percent in 2015.

Purchasing insurance is an important step, but it should be used in tandem with developing and testing a comprehensive incident response plan and performing a thorough cyber risk assessment, Wells Fargo noted.

The second annual study analyzed trends of network security and data privacy issues among 100 decision makers at companies with $100 million or more in annual revenue.

Check out Insurance Information Institute’s (I.I.I.’s) latest white paper on cyber risk threats and challenges here.

Banner Health Breach: Are You Covered?

Up to 3.7 million payment card and patient medical records are reported to have been compromised in a cyber attack at Phoenix, Arizona-based healthcare provider Banner Health, underscoring the threat faced by the medical/healthcare sector.

Beginning June 17, the attack targeted Banner Health patients, health plan members, healthcare providers and retail customers.

On its website, Banner Health said it had discovered in early July that cyber attackers may have gained unauthorized access to computer systems targeting payment card data at food and beverage locations, including cardholder name, card number, expiration date and internal verification code.

In late July, Banner Health also discovered that patient information, health plan member and beneficiary information may have been compromised—including names, birthdates, addresses, physicians’ names, dates of service, claims information, and possibly health insurance information and social security numbers.

Physician and provider information may also have been compromised, including names, addresses, dates of birth, social security numbers and other identifiers.

As investigators look into the specifics of this breach, a glance at the numbers reveals that Banner Health will almost double the number of records compromised in U.S. data breaches targeting the medical/healthcare sector in 2016, per figures released by the Identity Theft Resource Center (ITRC).

As of August 2, 2016, some 206 data breach events, exposing just under 5 million records, had been tracked against the medical/healthcare sector, according to the ITRC. Make that 207 data breaches, exposing 8.7 million records.

With Banner Health, total data breach events year-to-date will also rise to at least 573 breaches, with 17.2 million records exposed. (This does not account for any other data breaches that may have occurred since August 2).

A recent Ponemon report wisely reminded us that “no healthcare organization, regardless of size, is immune from data breach.”

In the last two years, the average cost of a data breach for healthcare organizations was estimated at more than $2.2 million, according to Ponemon.

“Data breaches in healthcare are increasingly costly and frequent, and continue to put patient data at risk. Based on the results of this study, we estimate that data breaches could be costing the healthcare industry $6.2 billion.”

Criminal attacks are currently the leading cause of breaches in healthcare, Ponemon said. All the more reason for cyber insurance to be purchased, as the I.I.I. advises in this white paper.

What Does A Cyberattack Really Cost?

The current market value put on the business impact of a cyberattack is grossly underestimated, according to a new report from Deloitte Advisory.

It finds that the direct costs commonly associated with data breaches, such as regulatory fines, breach notification and protection costs, and public relations costs account for less than 5 percent of the total business impact.

But the effects of a cyberattack can be even more far-reaching and last for years, resulting in a wide range of hidden or intangible costs related to loss of intellectual property, operational disruption, increase in insurance premiums, and devaluation of trade name.

In fact more than 95 percent of the financial impact of a cyberattack is likely to accrue in these areas and businesses can be caught especially unprepared for these intangible costs.

In a press release, Don Fancher, principal, Deloitte Advisory, and global leader for Deloitte forensic, says:

“Rarely brought into executive and board conversations around cyber risk are the costs and consequences of IP theft, cyber espionage, data destruction, or business disruption, which are much harder to quantify and can have a significant impact on an organization.

“Our intent is not to scare executives into thinking that all cyber incidents will be more costly than they think. It’s to give them a better understanding of their specific risks so they can make more educated decisions that are aligned with their business strategies.”

Find out more about cyber risks and insurance in this Insurance Information Institute paper.