Cyberattacks are growing in prevalence and sophistication, and so are the damage costs associated with these events. According to IBM's 2022 Cost of Data Breach Report, the average damage cost of a data breach has reached a record high of USD $4.35 million.
In response to increasing breach damage costs, a growing number of US businesses are partnering with cybersecurity insurers, who, in turn, respond to increasing service demands by inflating their cyber insurance premiums.
This domino effect of rising trends is reducing the financial benefits of cybersecurity insurance and the peace of mind these products are intended to offer. But thankfully, with some intelligent strategies, it’s possible to lower insurance costs and, therefore, maximize the value of your cyber insurance package.
To learn how to significantly reduce your cyber insurance premiums, read on.
Top 4 Factors Impacting Cybersecurity Risks
As an individual’s health conditions impact their insurance premium, a business's cybersecurity posture impacts its cyber insurance premium.
The greater the cyber threat exposure, the greater the associated cyber insurance costs to justify coverage. Conversely, the better a business’s cybersecurity program, the cheaper the cyber insurance premium. The reason is logical; resilient cyber security programs are less likely to be compromised by cyber risks. This exemplary risk management practice translates to reduced risk for cyber insurance companies.
According to this relationship, the best method for reducing your cybersecurity insurance premium is by focusing on improving your security posture.
Besides reducing cybersecurity insurance premiums, a good security posture could also increase your coverage level and even hasten payouts following a cyber incident.
The efficacy of your cybersecurity program is directly proportional to the price of your cybersecurity insurance premium.
Simply following a list of cybersecurity improvement strategies isn’t enough. These strategies need to be implemented with an understanding of the primary variables influencing a business’s cyber risk exposure.
Awareness of the tectonic plates in the threat landscape influencing risk exposure is the foundation of a successful cybersecurity program.
An organization’s overall cybersecurity risk can be broken down into four primary dependencies:
- Regulatory Compliance - Regulatory compliance standards such as NIST, HIPAA, and PCI DSS stipulate exemplary IT security standards to mitigate cyberattack success.
- Degree of Third-Party Vendor Risks - Partnership with third-party vendor service combines their attack surface with yours, essentially transferring their security vulnerabilities to you. The greater your vendor network, the greater the potential for third-party breaches.
- Business size - The larger the business, the greater the cybersecurity threat. A larger employee pool offers more opportunities for phishing attacks, increasing the potential of a successful cyberattack.
- Degree of data sensitivity - Highly sensitive data attracts cybercriminals because it can be used for leverage in exploitation attacks, such as ransomware attacks.
8 Ways U.S. Businesses Can Lower their Cyber Insurance Premiums
Establishing a resilient cybersecurity program is the best method for reducing your cyber liability insurance premium.
By implementing the following strategies, your cybersecurity program will reflect the information security characteristics cyber insurers look for when evaluating a business’s risk profile.
1. Implement Multi-Factor Authentication (MFA)
Multi-Factor authentication is now a mandatory security requirement for most cyber insurance providers. This security control was mandated for two reasons:
- Almost all cyberattacks begin with an attempt to steal user credentials.
- Because most cybercriminals depend on stolen user credentials to access a private network, MFA could disrupt a majority of network compromise attempts.
Cybersecurity professionals have been evangelizing the efficacy of MFA as an IT boundary security measure for some time. Even Microsoft has made some bold claims about its potential.
According to Microsoft, almost 99.9% of attacks can be blocked with Multi-Factor Authentication.
But outside of cybersecurity, MFA is often regarded as a nuisance, leading to productivity disruptions and a poor user experience. These inconveniences can be reduced.
Fortunately, these hindrances can be reduced while still meeting the essential cyber insurance requirement of MFA by implementing a passwordless MFA solution.
Passwordless MFA uses biometrics, such as a fingerprint, or a decentralized pin, to verify authorized connection requests without requiring a password.
When choosing an MFA solution, look for a solution that utilizes trust authentication standards, such as the public key cryptography standard by the FIDO alliance.
Any user-flow inconveniences of MFA are greatly outweighed by the destructive cyberattacks that could potentially be blocked by this security control, including:
- SIM card swapping
- Unauthorized remote access attempts
- Malware injections
- Phishing attacks
2. Implement a Cybersecurity Framework
Cybersecurity frameworks offer a security posture maturity pathway for any business wishing to improve its cybersecurity program. Progressing through this pathway creates a paper trail of evidence demonstrating your cybersecurity improvement efforts to underwriters.
The NIST Cybersecurity Framework is the most widely recognized framework for reducing cybersecurity risks. Because its implementation is typically voluntary, your decision to adopt this framework is evidence of your dedication to improved cybersecurity, behavior that alignes with the expectations of modern cyber insurance applications.
In a recent Wall Street Journal article, Judith Shelby, partner in the New York office of Kennedys Law LLP, confirmed the increased scrutiny of cybersecurity controls exercised by cyber insurance companies when assessing applicants.
"Companies buying insurance are subject to tight scrutiny of internal cyber practices. This is different from past years, when carriers poured into the cyber market and competition produced less-stringent underwriting."
- Judith Shelby, Partner in the New York Office of Kennedys Law LLP.
3. Implement a Zero Trust Architecture
Having a zero-trust architecture demonstrates a proactive defense mindset. With a zero trust model, a user’s identity and permission settings are continuously - verified even after network access is granted, especially when they attempt to access highly sensitive assets.
The zero trust model is so effective at discovering indicators of comprise, its implementation is becoming a mandatory requirement in an increasing number of regulations, including Biden’s 2021 national cybersecurity executive order.
If you have a remote workforce, cyber insurers will look for evidence of an endpoint protection solution which is best implemented through a zero trust model.
The pandemic has evolved the conventional business model into one that now includes a remote workforce, either partly or entirely. A zero trust model is characteristic of a cybersecurity program that’s adapted to the modern security challenges created by digital transformation - an attribute that will present your cyber insurance application in a very favorable light.
When choosing a zero trust model, it’s best to align with a standard trusted by government entities - the NIST 800-207 standard for Zero Trust.
4. Implement a Vendor Risk Management (VRM) Program
In 2021, 33% of all data breaches were caused by compromised third-party vendors, and a 2022 study revealed that 82% of surveyed CIOs believe their software supply chains are vulnerable to cyberattacks.
Gartner predicts that 45% of global organizations will experience a supply chain attack by 2025, a 300% increase from 2021.
The fragility of the third-party vendor attack surface was made very evident with the recent Log4Shell crisis placing millions of third-party services at a heightened risk of compromise.
A Vendor Risk Management program includes a risk assessment policy for continuously tracking security risks across the third-party threat landscape. A VRM is essential for industries most vulnerable to supply chain attacks, such as healthcare.
A trust VRM solution will include a continuous attack surface monitoring feature for tracking internal and third-party security posture deviations in real-time.
Generating an executive report of your security posture improvement over time could provide further evidence of your alignment with the security standards of a cyber insurance policy.
Because the cloud security attack surface is rapidly expanding, one of the most significant challenges of cloud security is identifying software misconfigurations facilitating sensitive data leaks. A VRM solution with an attack surface monitoring feature can detect misconfigurations, helping you address them before they’re exploited by cybercriminals.
5. Design an Effective Incident Response Plan
No cybersecurity program can guarantee the prevention of a data breach, but a well-documented cyber incident response plan can significantly minimize the impact of any attacks slipping through your defense.
Because an Incident Response Plan is a single document, it’s the easiest form of exemplary cybersecurity evidence you can provide to a cyber insurance provider.
6. Implement Cybersecurity Awareness Training for Staff
Humans will always be the weakest link in every cybersecurity program. The value of a costly cybersecurity investment is instantly nullified if an employee can be tricked into handing over the keys to your private network.
Employees fall victims to cybercriminal trickery because they don’t know how to recognize, or respond to, a cyberattack. Cybersecurity awareness training - coupled with a regular simulated phishing attack schedule - will keep staff vigilant to common cyber threats.
Cyber insurers understand how susceptible staff are to getting swindled by cyberattackers, so they’ll be very pleased to find evidence of a cybersecurity awareness training policy.
An effective security awareness training program should answer the following questions:
- What is phishing?
- What is malware?
- How do you recognize a malware infection?
- What is social engineering?
- What is ransomware?
- What is a supply chain attack?
- What is multi-factor authentication?
- What is the impact of a data breach?
- Can sim cards get hacked?
7. Follow a Regular Penetration Testing Schedule
Regular penetration tests demonstrate the resilience of your security defences. Cyber attacks are continuously cultivating their tactics to evade modern cybersecurity developments. A pen testing schedule reflects an understanding of the need to constantly adapt cybersecurity efforts to the evolving threat landscape, a mature mindset cyber insurers will highly appreciate.
8. Implement Reliable Data Backup Processes
According to IBM, ransomware attacks have escalated to the point of becoming the leading category of cyberattacks globally. The malware that deploys these attacks is intentionally designed to maximize system corruption.
Recovery from a ransomware attack is only possible by replacing corrupted systems with clean versions saved in data backup and data loss prevention solutions.
Though ransomware gangs might promise complete system recovery if a ransom is paid, they can never be trusted. NEVER pay a ransom. Doing so is a direct violation of the FBI’s ransomware response guidelines.
Besides having a data backup solution in place, you can further demonstrate your resilience to ransomware attacks with the following best defense strategies:
- Keep all security solutions, such as antivirus software, updated.
- Keep all software solutions updated with the latest security patches.
- Continuously monitor for data leaks that could facilitate unauthorized network access.
- Design a business continuity plan outlining recovery following a ransomware attack.
Reduce your Cyber Insurance Premiums with UpGuard
UpGuard offers a suite of features to help you identify and address security risks both internally and throughout the third-party network, including a data leak detection solution, an attack surface monitoring solution, and a security rating tracking solution.
The results of each of these tools contribute to a broader profile demonstrating your efforts to mitigate all of the critical components of cybersecurity risks. Evidence that can be instantly consolidated into a detailed executive report for cyber insurance companies.