Understanding the Fundamentals of Cyber Risk

Cybersecurity doesn’t have to be complicated. We’ve pulled together cyber risk fundamentals that insureds should know so they can analyze and reduce risks, threats, and vulnerabilities within their organization.

From ransomware to social engineering attacks, cyber crimes are on the rise across the globe. Understanding the types of risks, their impact, and how they might be mitigated can be a daunting task.

Cybersecurity doesn’t have to be complicated. We’ve pulled together cyber risk fundamentals that insureds should know so they can analyze and reduce risks, threats, and vulnerabilities within their organization.

Cyber Risk Fundamentals:

  • Threat awareness creates better preparation
  • Problems arise when threats meet vulnerabilities
  • It’s important to evaluate the quantitative nature of cyber risks
  • What comes after understanding the fundamentals?

Threat awareness leads to more preparedness

Cyber threats are liabilities that may result in damaged computer systems. They can bring harm to one’s business, disrupt operations, and bring about very costly consequences. As a result, it is important for insureds to be informed on the threats that can negatively impact that business.

Threat examples insureds should know about include:

  • Malware - Software that is designed to harm or exploit a computer or network. Malware may come in many forms, including viruses, worms, Trojan horses, ransomware, and spyware.
  • Ransomware - Type of malware that encrypts a victim's files. The attackers then demand a ransom from the victim to restore access to the files; hence the name. Ransomware attacks are typically carried out using a Trojan that is disguised as a legitimate file that the user is tricked into downloading or opening when it is actually malicious.
  • Distributed denial of service (DDoS) - Type of cyber attack in which the attacker attempts to make a website or network resource unavailable to users by overwhelming it with traffic from multiple sources. This is achieved by using a network of compromised computers (also known as a "botnet") to send a large volume of traffic to the target website or resource.
  • Phishing - Type of cyber attack that involves tricking people into giving away sensitive information, such as login credentials or financial information. Cyber criminals often disguise themselves as trustworthy entities using electronic communication.
  • Corporate account takeovers (CATO) - Occurs when an attacker gains unauthorized access to a company's online accounts, such as email, social media, or financial accounts. Once the attacker has gained access, they can use the compromised accounts to carry out various types of cyber attacks such as spreading malware, carrying out phishing scams, and stealing sensitive data.

What are the different threat sources?

  • Inside threats
  • Outside threats
  • Intentional threats
  • Unintentional threats
  • Natural disasters

What are cyber security vulnerabilities?

  • Lack of secure network
  • Weak password authentication systems
  • Missing authorization credentials
  • Software vulnerabilities
  • Poor data encryption

The Problem: When Threats Meet Vulnerabilities

Threat + Vulnerability = Risk

When a threat meets a vulnerability, that’s an exploit. A risk. The insured’s asset (usually digital) becomes either captured or loses a huge amount of value. This is obviously bad and can break down even large enterprises.

Since threats are usually exogenous, legitimate business operators don’t have much control over them. They will continue to pelt companies as rain falls on people. What insureds can do is control their vulnerabilities – just as they can buy an umbrella for the rain, they can reduce their cyber vulnerabilities.

To do this, let’s talk about risk and how your clients can deal with it. We will use the example of employing the common cyber security measure of multi-factor authentication (MFA) against password attacks.

Multi-Factor Authentication as a Risk Mitigant

Multi-factor authentication (MFA) is one important tool in the pantheon of security products which can be used to mitigate risk from cyber attack. Let’s take a look at how this one tool can be used to mitigate risk.

MFA is a security measure that requires users to provide more than one form of authentication to access a system or perform a transaction. MFA adds an extra layer of security by requiring users to provide a second form of authentication in addition to their password. This second form of authentication can be something that the user knows (such as a security question or a one-time code sent via text message), something that the user has (such as a security token or a biometric factor like a fingerprint), or something that the user is (such as a facial recognition scan).

Implementing MFA can significantly reduce the cyber liability of a company because it makes it much more difficult for attackers to gain unauthorized access to systems or sensitive data. If an attacker were to obtain a user's password, they would still need to provide the second form of authentication in order to gain access. This makes it much harder for attackers to successfully carry out cyber attacks, such as data breaches or ransomware attacks, which can result in significant financial losses and damage to a company's reputation.

We can now see how implementing even just one additional cyber security protocol such as MFA can lead to a much smaller window for cyber criminals to attack, reducing risk and ensuring the safety of the company.

What Comes After Understanding the Fundamentals?

Every organization that wants to protect its data assets has to go through cyber security assessments, compliance, and insurance. This journey can be long and complicated, but it doesn’t have to be.

Experts like Trava can help organizations protect themselves from rampant cyber threats and develop a cyber risk strategy for  the future. Retail brokers looking to provide robust cyber liability coverage for their insureds can visit Limit to receive quotes from the industry’s top carriers.

The Limit Perspective

Limit is a digitally-native wholesale insurance broker working on behalf of retailers in multiple lines of insurance and across the United States. Our platform allows clients to:

  • Obtain instant quotes from top cyber insurers
  • Find up to $3M in Insurance coverage automatically
  • Receive a plan with customizable and comprehensive coverage
  • 24/7 support

Limit is building a lean, tech-enabled business that can efficiently deliver insurance policies which are tailored to the needs of individual clients. We have taken some of the first steps to revolutionizing the industry and welcome you to learn more on our website: www.limit.com

Please reach out and connect with us and our representatives on LinkedIn as well.