With cybercrime on the rise and the likelihood of breaches increasing, organizations must adopt a proactive cybersecurity approach. In this era of ransomware-as-a-service and business email compromise, it’s not a question of if a breach will occur but when. That’s why having an incident response plan and cyber insurance is crucial.
These two essential tools work hand in hand, offering the difference between averting a crisis and enduring a costly attack. While obtaining and maintaining cyber insurance has become more complex, with varying coverage, evolving control requirements, and inadequate plans being chosen, a robust incident response plan plays a vital role. It not only helps organizations respond effectively to breaches but also streamlines the cyber insurance process.
Cyber insurance serves as a protective policy that organizations obtain to safeguard against cyber breaches. It provides coverage for specific liabilities and a portion of the associated breach-related expenses. As a relatively new form of insurance, cyber insurance continues to develop and adapt.
In recent years, we have witnessed updates in application requirements, fluctuating premiums, and improved clarity regarding the various levels of coverage offered. While cyber insurance is increasingly recognized as a crucial component of risk management, a recent report reveals that 48% of organizations anticipate their insurance to cover 80-100% of data breach costs. This reliance on insurance highlights the need for a balanced approach that includes comprehensive security measures alongside cyber insurance coverage.
Incident response involves a series of procedures and resources employed to detect, limit the impact of, and resolve cyber attacks, aiming to reinstate normal operations within an organization.
To effectively address incidents, organizations develop and execute an incident response plan, which outlines the strategies and measures to be taken before, during, and after an incident occurs. Integration of cyber insurance within the incident response plan is crucial. Often, incident response services are outsourced to third-party providers, utilizing solutions, retainers, or a combination thereof.
Implementing specific security controls is a prerequisite for organizations seeking to obtain cyber insurance. These controls serve a purpose beyond mere compliance, as they play a crucial role in preventing incidents and facilitating effective response in case of a breach or potential threat.
Outlined below are common security controls that are typically required or requested to secure favorable terms in cyber insurance:
By implementing these security controls, organizations not only improve their overall security posture but also demonstrate their commitment to risk mitigation, leading to more favorable terms when obtaining cyber insurance.
Managing and addressing the nine crucial items mentioned above becomes paramount when implementing an incident response plan. However, an incident response plan should extend beyond a static list of items on paper. It needs to be a dynamic and adaptable document that can be tested and adjusted in response to evolving security and business requirements. Key components of an incident response plan include:
An incident response plan not only reduces the risk of a major incident but, according to the IBM Cost of a Data Breach Report 2022, it can also significantly decrease incident response costs by up to 45%.
Incident response planning and cyber insurance complement each other when organizations aim to mitigate risk throughout the entire breach lifecycle.
Having an effective incident response plan in place can help prevent a minor threat from escalating into a major incident. Concurrently, cyber insurance provides a means to transfer a portion of the risk to an insurer, facilitating faster recovery from both business and financial perspectives. Furthermore, the robust security controls required for cyber insurance and incident response planning contribute to preventing incidents in the first place. Relying on just one aspect is insufficient; organizations must integrate incident response and cyber insurance as complementary measures to effectively manage risk before, during, and after a breach.
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