If your cyber insurance premium blew up this year, you’re not alone. Pratum’s clients have faced insurance cost increases of anywhere from 25% to 10x in the last six months. And to make the situation even more frustrating, the application process has become extremely complex as insurance companies ask hundreds of questions at renewal time.
In this post, we’ll describe the key ways you can get lower cyber insurance premiums and survive endless underwriting questionnaires while still getting the coverage essential to your business.
The following policies and tools have the dual benefit of making you more secure and convincing underwriters that you’re a lower risk. Ross Ingersoll, an executive risk & cyber account executive at one of Pratum’s insurance-industry partners, Holmes Murphy, in Des Moines, Iowa, points to three security policies/tools every insurance carrier wants to see.
“MFA is, by far, the leading indicator to prevent ransomware losses, and it’s the number one thing carriers are looking for,” Ingersoll says. Without a sound MFA policy, you may be denied coverage. And a general answer of “yes, we have MFA” won’t satisfy most carriers. They want details on how your MFA policy protects admin level users, secures all remote access and secures corporate email on non-corporate devices and web apps.
Ransomware struggles to get past these systems that can catch threats early and shut them down. An IBM study found that organizations using security AI and automation spend 80% less handling a breach. A solution like Pratum’s Managed XDR can detect anomalous activity, correlate actions into a threat picture and proactively shut down attacks. And that often happens in milliseconds.
Ingersoll asks his clients: “Do you have an offline or segregated backup solution? Have you tested it frequently? Monthly? Quarterly? Is access to the backup restricted by MFA? Along with that, do you have an incident response plan to access the backup and have you tested the IR plan?”
The last couple of years have rocked the cyber insurance landscape with three factors hitting almost simultaneously. Insurance companies had set rates artificially low because they lacked enough history to do accurate underwriting. Then the ransomware wave and remote workforces arrived simultaneously, sending claims skyrocketing.
Put all that together, and you get an industry trying to right-size its revenue in a hurry by jacking up rates. At the same time, cyber insurance companies have taken other steps to control their losses:
You probably can’t avoid a price hike. But your actions can lead directly to lower cyber insurance rates. Consider the following story from Ingersoll of Holmes Murphy:
Ingersoll recently met with a client six months before their cyber insurance policy was up for renewal. The client lacked several of the key security tools described below, but on Ingersoll’s advice, they quickly ramped up their security posture.
To measure the ROI, Ingersoll got insurance quotes before the improvements and after. With no security adjustments, the $3 million policy’s price would have jumped from $20,000/year to $80,000/year. And ransomware incidents would have been limited to $100,000 of coverage.
With the new security policies/tools in place, the client kept their original coverage amounts and saw the price rise to $35,000. That’s still a 75% increase—but it’s a lot better than paying 300% more for less coverage.
“The increase may be inevitable,” Ingersoll says. “But you can manage the increase while maintaining a robust policy. That’s the moral of that situation.”
Along with focusing on the key areas mentioned, you should brace for a significant time investment at policy renewal time. For both new policies and renewals, expect a long list of questions probing deeply into your information security policies and tools. We recently helped a client respond to 275 individual questions from their cyber insurance carrier.
So start 5-6 months before the renewal is due and get help from third-party experts such as Pratum and an experienced insurance broker.
Expect questions like these:
Pratum’s consultants help organizations create customized security plans that not only help with cyber insurance costs but secure the organization’s future. Contact us today for a conversation about how we can help boost your security posture.
Your risk management strategy isn’t just about what you do. It’s about what your vendors are doing, too. That means a complete information security plan requires following best practices for third-party risk management of the vendors you rely upon. Sometimes you can simply review reports that the third parties send you. Sometimes you have to create custom questionnaires to address your specific concerns. And sometimes you have to ask hard questions to cut through the haze of what your vendors are really saying about their security posture.
This blog highlights best practices our consultants have identified when performing third-party risk assessments on the businesses that help keep you in business.
To protect all parties, always start by signing a mutual non-disclosure agreement with every vendor before asking them to answer your questions or send you copies of reports on their information security policies.
Then you can move on to asking for copies of reports provided by outside assessors. Here are some reports that companies commonly request to support a risk assessment on a potential or current vendor. (Of course, each of these won’t be available for every vendor.):
In addition to the reports above, you may decide that vendors should complete a custom security questionnaire created by your company. Common questions on these questionnaires include:
Your job isn’t done just because a vendor returned the form you requested. A qualified member of your team needs to review the answers to ensure that the questions were answered thoroughly and that the answers meet your expectations. An experienced reviewer will be able to spot answers that are overly vague, sound misinformed or deflect attention from issues that the vendor doesn’t really want to address.
This blog provides tips on what you should look for when reviewing a third-party report.
Don’t be afraid to go back with more questions. Your goal isn’t simply to have a completed questionnaire on file for the vendor. You need assurance that the vendor’s controls are adequate and that risks are managed properly.
Here are two areas where Pratum commonly sees red flags on third-party risk assessments:
You should be especially vigilant about responses from vendors that provide solutions based on a cloud-vendor’s infrastructure. Many organizations don’t fully understand the shared responsibilities inherent to working with cloud providers.
Vendors need to understand that your risk assessment includes their controls, not just the controls at the cloud provider. For example, a vendor may just say, “Our hosting provider is AWS, and they have a SOC 2®.” That’s not good enough. While the cloud provider’s controls are certainly relevant, they don’t cover all of your concerns. We have seen plenty of vendors using insecure workloads because of misconfiguration or other issues.
This problem may even pop up when you ask about physical security. The vendor may dodge this question by stating, “We are not allowed access to AWS datacenters.” That’s probably true. But to assess the vendor’s risk posture, you need to know about the physical security controls employed at the vendor’s facilities.
For a detailed guide to getting started on a third-party risk management program, see this summary of a recent presentation at Pratum’s Secure Iowa conference. For advice on customizing a program for your specific situation, contact us to talk to a consultant today.
Every organization is unique, so the risks they each face are not the same. In order to make a plan of action to protect your business, you need to first understand where the threats against you are. Once you know those risks and gaps, you can start to identify the likelihood of them occurring and the impact they could have on your organization.
Because of this, an information security risk assessment forms the cornerstone of any cybersecurity policy. Clear risk knowledge is crucial when making risk-based decisions for your company. Without full knowledge of where, how, and why a threat could occur, you won’t be able to stop it. That’s why understanding likelihood and impact for any given threat are both important factors in the risk assessment process.
Pratum’s consultants perform information security risk assessments using a clear four-step process based on a clear formula. Start thinking about your risks by reviewing the basic threat likelihood/impact formula below.
You don’t need a complex system in order to improve or support your organization’s security environment. However, your organization’s leaders need tools that show them where to spend time and resources in order to reduce potential risks to the company. That’s how risk assessments can shed light on the key factors in this decision-making process.
A better understanding of the system also helps out other members of your staff. Members of the IT department need to know what products and processes to put into place in order to limit potential risks. The more knowledge they have, the better they can work with leadership to determine and address security concerns. Sharing the risk assessment results with members of the IT team will help them understand where they’ll get the most from efforts to reduce risks.
The standard described in NIST SP 800-53 implies that a realistic assessment of risk requires an understanding of these areas:
For handling the most basic level of risk assessment, risk managers can follow this simple formula:
Risk = (Threat x Vulnerabilities) x Impact
The first part of the formula (Threats x Vulnerabilities) identifies the likelihood of a risk. For example, if there’s a known security flaw in older versions of software you use, there’s the threat of hackers exploiting that particular vulnerability to compromise your system. But if you’ve applied the latest software patches that fix the problem, then the vulnerability cannot be exploited, and the threat has been eliminated.
Impact measures how much disruption you’ll face if the threat actually occurs. Combining likelihood and impact produces a residual risk rating of Low, Medium or High. Each organization’s residual risk rating may differ based on the likelihood and impact that each control deficiency introduces.
You could also represent this concept with a simple chart like this one:
For example, let’s consider the risk of a hacker getting access to a folder containing all of your public-facing marketing materials. That event may have a medium likelihood, but it has a very low impact. Those materials are already publicly available on your website, etc., so unauthorized access to them does no harm. That risk gets a Low rating.
But the formula changes if the risk is an employee in the Accounts Payable department clicking a phishing link. There’s at least a medium likelihood of one of those employees making this mistake. And the impact would be very high if a hacker got access to a user account that controls financial transactions. That risk gets a High rating.
Keep in mind that a very High impact rating could make a risk a top priority, even if it has a low likelihood. If a breach could shut down a hospital’s life-support equipment, for example, that risk obviously deserves serious consideration on your priority list.
If you’d like to read detailed guidelines on how to rate risks by various factors, consult NIST SP 800-30.
Now that you know the formulas for determining likelihood and impact during a risk assessment, it’s time to focus on specific risks.
1. Inherent risk – This is the risk level and exposure your system faces without taking into account any mitigating measures or controls that are actively in place. Where is your system at its weakest when no other security measures are in place to protect them? Which risks deserve the highest rating based on their likelihood and potential impact?
2. Residual risk – An area with a higher likelihood and impact of a threat on the organization, from an inherent risk level, may need additional controls to reduce the level of risk to an acceptable level. After you apply those controls, you are left with what we call “residual risk.” If the residual risk level after mitigating controls is still higher than you prefer, then additional risk management measures and techniques should be introduced.
Mitigating measures you may apply include:
Reading through how to determine likelihood and impact can help you understand first steps in your risk assessment process. But you’ll probably still need help from cybersecurity consultants to carry out a full assessment. These experts look over a number of key factors you may not have considered.
Cybersecurity consultants analyze your organization’s structure, policies, standards, technology, architecture, controls, and more to determine the likelihood and impact of potential risks. They will also review your current controls and evaluate their effectiveness.
For example, a financial management company turned to Pratum when it realized that investors were choosing portfolio managers based, in part, on a company’s strength of cybersecurity. The management firm asked Pratum’s consultants to take a deep dive into its administrative, physical and technical controls. Pratum guided the company in developing a clear summary of its high and moderate risks along with recommendations for remediation. (You can read about the entire process in this case study.)
Consultants also assess any gaps between your current security posture and where you want your organization to be. A core part of that process will be determining accountability and assigning risk ownership at the appropriate level and to the appropriate team. It’s important to have the right security measures in the right hands.
The end goal is to get to a level of risk that is satisfactory to your management team. It’s important to evaluate and be aware of the risk in your environment so you can implement appropriate controls to mitigate this risk and secure sensitive information. Evaluating risk means understanding the biggest factors of any security threat, likelihood and impact.
If you’re looking for a security partner to address your risk assessment needs, please contact a Pratum Consultant at any time for more details on ways you can secure your business.
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