2021 saw higher cyber threats than any other year to date. Even with the advanced knowledge experts have on cybercrime, the new developments in preventative tactics-hacking schemes have become more difficult to detect in advance. With the increased attention on cyber, most people are paying more attention to vulnerabilities in their personal and professional lives. We commonly associate cyber fraud with things like social security numbers, email schemes, and fake websites. Though these areas are highly infiltrated with cyber security risks, there are other areas people should be directing their attention to. Hackers and professional cybercriminals are aware of the increased protection and attention to common risks and are putting their efforts elsewhere as a response. Being aware of surprising cyber threats that your business could face can help you implement better practices and protect your business.
The severe conflict between Russia and Ukraine has resulted in high-level cyber attacks and threats of imminent shutdowns reaching the west. Though the invasion of Ukraine by the Russian military escalated over this past weekend, the tension between the two territories has been steadily increasing over the past several weeks. Leading up to the invasion, Russian hackers have been shutting down Ukrainian websites, including important government and bank sites. These sophisticated cyber-attacks have cut off access to crucial resources for the Ukrainian people. Experts are going so far as to name these events the start of a true cyberwar. As more and more countries get involved in the conflict to aid the Ukrainian people, Russia continues to warn of consequences. The clear threat of more cyber hacks now has the potential to hit the US, and businesses are preparing for how to respond in the event that they are targeted.
Though blockchain has become a common topic in business and personal conversation, many don’t fully understand its purpose, or it's potential to change the digital landscape and disrupt industries. Blockchain technology was originally developed to secure emerging cryptocurrencies like Bitcoin. In essence, blockchain is a data structure that builds digital ledgers across a peer-to-peer network. Blockchain funding has more than doubled since 2018 and it will reach nearly $16B by 2023, according to a CB Insights research brief. The massive traction blockchain is experiencing is due to its ability to store and transfer data securely without the need of a trusted third party. Industries like finance, insurance, and even manufacturing are planning to utilize the technology to secure and simplify their processes. This will not only change the basic structure of the industries but change the ways in which we interact with these industries as well. The revolutionary and coveted abilities of this technology will result in a radically different future, evolving the way we do business, and how we protect our assets.
Cybercrime rates are the highest they’ve ever been, and experts don’t expect that to change anytime soon. Companies are expected to not only try and reduce the frequency of cybercrime in their organization but prepare to respond to cybercrime events that are inevitable. The 2020 Internet Crime Report revealed that in the past 5 years there has been an average of 440,000 complaints and that the number grew by 330,000 in 2020. Those 5 years combined have resulted in a total loss of $13.3 Billion.
The past decade has exponentially increased the world's radar on cybersecurity threats and vulnerabilities. These years have shifted society into a primarily digital where business, social, and financial matters are typically handled through some form of an online platform. In the past two years alone, due to the pandemic, the few areas of life that remained physical are primarily digital now as well. A report by Purplesec for 2021 claimed that cybercrime has increased 600% since the start of the pandemic. While insurance agencies and those prone to threats have had a keen awareness of the rising risk, the government is also stepping up and claiming some responsibility in providing protection to the general public.
Is Cyber Insurance Worth the Investment?
Cyber-attacks have become a top threat to businesses both big and small in the last decade. Social engineering schemes, malware, and ransomware have all seen a significant uptick, especially since the start of the pandemic. According to the Identity Theft Resource Center, 2021 has already hit a record high for cyberattacks, exceeding the total amount in 2020 by more than 17%. So, with cyber threats (and the cost to mitigate them) skyrocketing, its time to consider investing in Cyber Insurance to protect your business.
The insurance industry is still doing what it can to react to the COVID-19 pandemic. This means situations are changing rapidly within certain sectors of the insurance marketplace. 2020 was already projecting to be a difficult year for insurance markets prior to COVID-19, with property and auto insurance rates seeing significant increases and many carriers reducing capacity in coverage areas like directors and officers liability insurance. The pandemic has only accelerated some of these movements.
COVID-19 has changed the way many organizations do business. Whether out of a sense of caution or to comply with emergency orders, many businesses have shifted to allowing more work from home and remote work from employees. This increase in remote work has had significant impacts on cyber security and cyber insurance.
More employers are opting for a remote workforce. Whether due to the recent COVID-19 health crisis's challenges, costs associated with a more traditional workspace, keeping your talent on the team after a move, or other issues with a conventional commute to the office more employers than ever are taking advantage of the availability of technology and the possibility of having remote team members.
Given the relative newness of cyber insurance policies, comparatively little case law exists interpreting these policies in the context of claims. Courts have sometimes struggled with how to interpret unique policy provisions in the context of variations of computer fraud. While some courts have taken highly technical approaches to the language contained in the policy, other courts have taken a more relaxed approach based on the understanding of the parties. A recent case out of the Eleventh Circuit Court of Appeals highlights these issues. Principle Solutions Group, LLC v. Ironhorse Indemnity, Inc. tackled a claim dispute between an insured business and an insurance company involving a cyber claim.