Why Breaking Down Silos Is Key To Optimizing Cyber Insurance Investments
Raja Patel, Chief Product Officer, Products, Sophos.
In a cybersecurity landscape populated with increasingly complex threats, an integrated approach to cyber risk management that balances security controls and cyber insurance is crucial. But many organizations still operate in silos when purchasing a cyber insurance policy. For example, IT teams that build and maintain cyber defenses may supply security control information for insurance applications—but have little input into policy scope and coverage levels.
That’s a missed opportunity. Organizations that coordinate their cybersecurity protections with their cyber insurance efforts can improve both their defenses and insurance positions, lowering costs and enhancing protection at the same time.
But this requires participation and collaboration from leaders across different business units. It’s up to business and IT leaders to facilitate more effective collaboration so their teams can optimize cyber insurance investments.
Consequences Of Siloed Cyber Risk Management
Picture this: Your IT team implemented advanced security measures and conducts routine vulnerability assessments to ensure your organization’s digital assets are protected. However, your procurement team that manages the organization’s insurance policies is unaware of the IT team’s security efforts. When it comes time to negotiate coverage options for cyber insurance, procurement misses opportunities for premium reductions and more favorable insurance terms based on existing protections.
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This scenario illustrates just one way that siloed planning can hinder an organization’s cyber insurance position. A lack of collaboration throughout the process can also cause an organization to underestimate the amount of coverage it needs or prioritize the wrong aspects of an insurance policy.
Moreover, siloed planning can lead to confusion about what an organization’s insurance actually covers—which is more common than you might expect. Among organizations with a cyber insurance policy, 43% of cybersecurity and IT leaders think their policy covers breach notification support but aren’t certain. These oversights can undermine the value of your cyber insurance investment, often resulting in higher premiums, inadequate coverage, insufficient support and hindered recovery in the event of a cyberattack.
Considerations For Effective Cyber Insurance Planning
A unified and holistic approach to cyber risk planning can significantly improve your insurance position and defenses. If you’ve managed cyber risk the same way for years, it’s time to elevate your strategy. By prioritizing cross-functional collaboration and proactive planning, you can secure optimal insurance coverage and better protect your assets.
1. Start early.
Don’t wait until your cyber insurance renewal is approaching to start planning. Being proactive allows you to shop for insurance providers, negotiate better terms, gather requirements and implement or improve controls. It also enables strategic investment planning.
For example, let’s say your IT team wants to adopt a managed detection and response (MDR) service, but your finance team tells them there’s no budget for it. After evaluating the situation more closely, the teams discovered that investing in MDR would significantly improve the organization’s cyber insurance position, unlocking cost savings on premiums they can reallocate to fund the service.
Allowing adequate time for researching and comparing insurance providers and policies results in more informed decisions and helps you avoid rushed choices that leave gaps in coverage.
2. Establish internal alignment.
Starting the cyber insurance process early also ensures there’s time for stakeholders to align internally before taking action. Start by identifying who should be involved—typically, leaders from IT and cybersecurity, finance, procurement, legal and compliance.
Once you’ve designated your key stakeholders, consider holding a kickoff meeting and establishing a channel for ongoing communication. During this initial phase, take stock of your current cybersecurity measures and any gaps in insurance coverage. Make sure you also clearly define stakeholders’ roles and responsibilities to ensure accountability and alignment between your cyber insurance strategy and overarching business objectives.
3. Consider your unique needs.
Proactive planning allows you to conduct a comprehensive evaluation of your organization’s specific risk profile and insurance needs. Stakeholders from different business units have unique perspectives and drivers for coverage, so it’s smart to create a document that serves as a single source of truth regarding coverage needs.
As you document your insurance needs, make sure to address coverage scope, policy limits and deductibles. It’s also important to maintain consistent communication between cross-functional stakeholders and the team actually managing your insurance application (likely from procurement). Your investments will only be recognized by insurers if the quality of your defenses is understood and clearly conveyed in the application.
Level Up Your Cyber Resilience With Holistic Planning
Before applying for cyber insurance, have you taken time to evaluate your cybersecurity posture, assess your risk profile and achieve internal alignment among key stakeholders? If you haven’t, it’s not too late to adopt a more integrated and cross-functional approach to your cyber insurance strategy.
Cyberattacks impact nearly every aspect of a business, from financial stability to operational continuity. That’s why leaders from across the organization must work together to coordinate their cyber defenses and insurance. With stakeholders working together, you can make smarter cybersecurity and cyber insurance investments, leading to reduced risk and lower costs—bolstering your resilience in the face of modern cyber threats.
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