‘Post-Quantum’ Agility is Critical

Alex Khan / Insurance Thought Leadership / 10 October 2023

The Importance of Cybersecurity Insurance

In today’s digital age, cyber threats are becoming more prevalent and sophisticated. From large-scale data breaches to targeted attacks on businesses, the consequences can be devastating. That’s why cybersecurity insurance has become an essential tool for organizations looking to protect themselves from potential financial losses and damage to their reputation.

Understanding Cybersecurity Insurance

Cybersecurity insurance, also known as cyber liability insurance or cyber risk insurance, is a type of coverage that helps organizations mitigate the risks associated with cyber-attacks and data breaches. It typically covers expenses related to both first-party and third-party damages.
First-party damages refer to the direct costs that an organization incurs following a cyber incident, such as business interruption, data recovery, and legal fees. Third-party damages, on the other hand, are costs associated with lawsuits and settlements from affected customers or clients.

Why Cybersecurity Insurance is Necessary

While some businesses may believe that their current insurance policies cover cyber incidents, this is often not the case. Traditional insurance policies typically do not include coverage for cyber risks, leaving organizations vulnerable to significant financial losses if they fall victim to a cyberattack.

Moreover, the costs associated with a cyber incident can quickly add up and have long-term impacts on an organization’s bottom line. According to a 2020 study by IBM, the average cost of a data breach in the United States was $8.64 million. This includes expenses such as legal fees, notification costs, and lost business opportunities.

KEY TAKEAWAYS:

–Due to quantum computers’ ability to solve problems like prime number factoring, which is used to protect internet communications, this technology poses a significant threat to the security of traditional cryptographic systems.

–Insurers must not only switch as quickly as possible to encryption algorithms that are impervious to quantum computing but must develop cryptographic agility, which allows them to switch encryption methods and algorithms as needed.

Read the full article from Insurance Thought Leadership here.