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Strengthening Cybersecurity Helps Increase Insurability – Part 2
Organisations face the ever-present threat of cyber breaches and the importance of proactive measures to safeguard sensitive data and assets is obvious. Two essential tools that organisations should consider are an incident response plan and cyber insurance. In this article, based on information from specialist security operations provider Arctic Wolf, we cover how, by implementing a robust incident response plan and obtaining adequate cyber insurance coverage, organisations can not only effectively respond to breaches but also streamline the insurance process, ultimately improving their insurability.
Developing an Incident Response Plan
Managing the security controls is vital when implementing an incident response plan. However, an incident response plan is more than a checklist—it is a dynamic and living document that requires regular testing and adjustments based on evolving security threats and business needs. Key components of an effective incident response plan include:
- Formulating an Early Incident Response Strategy: Developing a clear strategy for responding to the initial stages of an incident sets the foundation for effective incident management.
- Identifying Stakeholders and Their Roles: Assigning roles and responsibilities to relevant stakeholders ensures efficient communication and a well-coordinated response during an incident.
- Appointing a Response Team: Establishing a dedicated response team equipped with the necessary expertise enables swift actions and effective threat mitigation.
- Conducting Tabletop Exercises: Simulating various incident scenarios through tabletop exercises helps test the response strategy, identify potential gaps, and improve incident handling capabilities.
- Testing Backup and Recovery Systems: Regularly testing backup and recovery systems ensures their reliability and the ability to restore critical data and systems promptly.
- Implementing Readiness Technologies: Integrating readiness technologies, including the security controls mentioned earlier, enhances overall preparedness and response capabilities.
The Synergy Between Incident Response and Cyber Insurance
The combination of an incident response plan and cyber insurance creates a comprehensive approach to risk mitigation and transfer. An incident response plan helps prevent minor incidents from escalating into major breaches, while cyber insurance transfers a portion of the risk to the insurer, aiding faster recovery, particularly from a business and financial standpoint. Additionally, the effective security controls required for cyber insurance and incident response plans significantly reduce the likelihood of incidents occurring in the first place. Organisations should recognise that relying solely on one tool is insufficient. Instead, they should leverage the synergy between incident response planning and cyber insurance to ensure comprehensive risk management.
How does this Increase Insurability?
Implementing a comprehensive incident response plan and incorporating the recommended security controls can lead to substantial cost savings in the event of a cyber incident. According to the IBM Cost of a Data Breach Report 2022, proper incident response planning and testing can reduce incident response (IR) costs by up to 45%.
By having a well-prepared incident response plan in place, organisations can minimise the impact of a breach, respond swiftly and effectively, and limit the financial and reputational damages. Here are some potential cost savings that can be realised through the implementation of these solutions:
- Reduced Downtime: A well-executed incident response plan can help minimise the duration of a cyber incident, resulting in less downtime for critical systems and operations. This reduction in downtime directly translates into cost savings by minimising the disruption to business operations and potential revenue loss.
- Efficient Resource Allocation: An incident response plan enables organisations to allocate resources effectively during an incident. By having a designated response team and clearly defined roles for stakeholders, organisations can avoid the unnecessary allocation of resources or delays in decision-making, ultimately saving time and reducing costs.
- Faster Recovery: Testing backup and recovery systems as part of the incident response plan ensures their reliability and effectiveness. In the event of a breach, a well-tested recovery system can help restore operations more quickly, minimising the financial impact associated with prolonged disruptions.
- Legal and Regulatory Compliance: Compliance with data protection regulations is essential to avoid potential fines and legal penalties. A robust incident response plan that includes adherence to security controls can help organisations demonstrate their commitment to compliance, potentially reducing legal and regulatory costs.
- Reputation Preservation: Swift and effective incident response can help organisations protect their reputation. By minimising the scope and impact of a breach, organisations can maintain customer trust and loyalty, reducing the potential for long-term financial losses due to reputational damage.
Where this Saves Cost
While the exact cost savings may vary depending on the organisation’s size, industry, and the nature of the incident, implementing these solutions can significantly reduce the financial burden associated with cyber incidents. It is important to note that cost savings are not limited to immediate financial implications but also extend to long-term business viability and resilience in an increasingly interconnected and threat-laden digital landscape.