- Mar 10, 2021 10:17 pm GMT
Several Energy Companies I'm familiar with have purchased Cyber Insurance. This new cyber risk framework from the New York Department of Financial Services (DFS) could have implications on cyber insurance premiums and reporting requirements for these Energy Companies, and others that purchase cyber insurance.
My key takeaways from the newly released NY DFS Cyber Insurance Risk Framework
Many insurers still have work to do to develop a rigorous and data driven approach to cyber risk, and experts have expressed concerns that insurers are not yet able to accurately measure cyber risk
The decision to offer and price cyber insurance for specific organizations should be based on a careful assessment of that organization’s risk.
Cyber risk is driven in large part by the caliber of an organization’s cybersecurity program, and so can vary considerably from one organization to the next.
Insurers that don’t effectively measure the risk of their insureds also risk insuring organizations that use cyber insurance as a substitute for improving cybersecurity, and pass the cost of cyber incidents on to the insurer.
Without an effective ability to measure risk, cyber insurance can therefore have the perverse effect of increasing cyber risk – risk that will be borne by the insurer.
Managing this growing cyber risk is an urgent challenge for insurers.
In addition to overall rising costs, insurers must account for the systemic risk that occurs when a widespread cyber incident damages many insureds at the same time, potentially swamping insurers with massive losses. This systemic risk is illustrated by the massive supply chain compromise in SolarWinds’ Orion enterprise network management software.
Last year, I developed a presentation to improve the timeliness of reporting cybersecurity controls evidence data to Cyber Insurers from an insured entity, which appears to align with the NY DFS Framework.
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