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Enhancing the Role of Insurance in Cyber Risk Management

image of Enhancing the Role of Insurance in Cyber Risk Management

The digital transformation of economic activities is creating significant opportunities for innovation, convenience and efficiency. However, recent major incidents have highlighted the digital security and privacy protection risks that come with an increased reliance on digital technologies. While not a substitute for investing in cyber security and risk management, insurance coverage for cyber risk can make a significant contribution to the management of cyber risk by promoting awareness about exposure to cyber losses, sharing expertise on risk management, encouraging investment in risk reduction and facilitating the response to cyber incidents. This report provides an overview of the financial impact of cyber incidents, the coverage of cyber risk available in the insurance market, the challenges to market development and initiatives to address those challenges. It includes a number of policy recommendations which support the development of the cyber insurance market and contribute to improving the management of cyber risk.

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Supporting the cyber insurance market through better policies and regulation

This chapter provides a set of recommendations on policy and regulatory measures that could be implemented to improve the development of the cyber insurance market. Governments could contribute to the availability of data on past cyber incidents, forward-looking analyses on the changing nature of the risk and on the effectiveness of security practices, including through the development or promotion of cyber security standards. Governments should also closely monitor the market developments and consider if there is a need to intervene to encourage greater clarity on coverage or to support the management of accumulation risk.

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