In 2020, the world seemingly entered a new era of cyberattacks. Although there have been decades of viruses, breaches, and other forms of attack, last year saw increased bad actor sophistication, a propensity to pay in ransomware cases, and a broad swath of geopolitical uncertainty — conditions that hackers have found favorable.
Cybersecurity Insurance Has a Big Problem
There’s literally not enough money to keep the system afloat in the event of a major attack.
January 11, 2021
HBR Staff/Unsplash
Summary.
There are worrisome trends in cybersecurity: Attacks are more sophisticated, ransoms are rising, and uncertainty is growing. But while companies might look to cyber insurance to protect themselves from these growing risks, there’s another problem: There might just not be enough money in the still emerging sector to cover their needs. So what can companies do? They should still invest in coverage, in part to help the market grow, but they also need to look for other ways to cover their potential exposure, including self-insurance mechanisms that range from simply carrying additional capital to address future cyber attacks through the creation of specific risk-financing activities that function like insurers.