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Board Members Turning to Cyber Insurance for Protection

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Board members are turning to cyber insurance for protection from cyber-attacks. Is the strategy a sound one or should prevention remain the focus?

According to Diligent Corporation’s Dottie Schindlinger’s presentation at the NYSE Governance Services Cyber Risk Board Forum in February, 60% of board directors use personal email to communicate, 48% use their personal computers, tablets, or phones to download company documents, and 22% of them store information on their devices. This is disconcerting, as personal accounts and devices tend to be less secure than those of corporations. Financial information, M&As, new market entry, personnel decisions, and other sensitive information that would usually be protected by company security infrastructure are vulnerable. An attachment sent via email can be easily identified and accessed by hackers.

Board Members are Decision-Makers 

Boards must recognize that in order to survive in a world of increasing cyber threats, a risk management and control strategy needs to be in place. A transfer of risk is necessary, and boards are increasingly looking to the cyber insurance industry to mitigate the risk and harmful effects of a potential data breach.Chad Hemenway, Managing Editor of Advisen News, presentedat Advisen’s 2015 Cyber Risk Insights Conference on decision-making around cyber security. According to his research, 80% of managed care organizations, 50% of retailers, and 50% of tech companies have contracted cyber insurance.In 33% of those cases, boards recommended buying cyber insurance. In 25% of the cases, boards made the decision about the purchase.

Boards as Agents of Change 

A robust and innovative cyber security strategy can serve as both a defense in protecting a business as well as a catalyst for growth and competitive advantage. It may be up to boards to lead executive teams to this conclusion. According to a 2016 Cisco Survey, only 44% of executives see cyber security as a competitive advantage, and a mere 30% believe its purpose is to enable growth. Board members must encourage executives to be progressive and forward-thinking in navigating the digitalization of information and processes.

Specialized Security Services  

Specialized Security Services is a cyber-security company that offers end-to-end consulting services to companies nationwide. We provide IT security solutions that cover the entire lifespan of a cyber-attack, from identification to recovery. For more information, please visit our homepage today.

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