Cyber threats are evolving rapidly due to the growing digital transformation of society, the widespread use of internet-enabled devices and processes, and the changing profile of hackers.
Recent high-profile cyber attacks demonstrate that the extent of associated possible losses is also broadening, increasingly comprising both physical and financial damage relating to data privacy breaches and to companies’ tangible and intangible assets, and also business interruption costs. As a result, the issue of cyber protection is rising up the corporate agenda, at both large and small companies.
Swiss Re’s latest sigma report ‘Cyber: getting to grips with a complex risk’, says businesses need to do much more to integrate cyber security into their risk management initiatives.
Highlights from the report include:
Recent high-profile cyber-attacks increasingly demonstrate that the costs of a cyber security breach extend beyond managing the fallout of lost or corrupted data. Firms must now factor in the potential damage to their reputation, physical and intellectual property, and also disruption to business operations. The increasing scope and magnitude of potential costs associated with cyber-incidents reflect the ever-evolving cyber risk landscape, which in turn is being shaped by three main dynamics:
- The growing speed and scope of digital transformation;
- The widening sources of vulnerability from hyper-connectivity, with the rapid spread of, for example, internet-enabled devices and cloud computing;
- And the growing sophistication of hackers alert to the potential economic gains from successful cyber-attacks.
Despite increased awareness of the dangers, firms are generally ill-prepared to cope with cyber risks. Relatively few firms have integrated cyber security into their mainstream risk management. Regulation could be a catalyst for change with legislation coming into force in many jurisdictions requiring firms to build enhanced data protection safeguards. As a result, “firms – large and small – need to invest more in cyber security architecture to develop robust pre-and post-loss risk management capabilities,” says Swiss Re Chief Economist Kurt Karl.
Download report sigma 1/2017 – Cyber: getting to grips with a complex risk