Cyber insurance is now a big business (and growing more over time). Cyber insurance statistics show that claims grew by 100% in the past three years while claims closed with payments grew by 200% with around 8100 claims paid in 2021.
Of course, certain industries are more likely to file claims than others. The frequency of cyber insurance claim triggers is the highest for the healthcare industry, followed by IT and communications, insurance, and retail.
Cyber insurance has become essential and there’s no good reason for a company not to get it. Still, in a perfect world, you’d buy it and never use it. While receiving a cyber insurance payout does help offset the cost of a breach, it never really makes you whole.
What Does Cyber Insurance Cover?
There are two categories of cyber insurance: first-party and third party. First-party insurance covers the expenses at your business due to a data breach. Third-party insurance is a liability coverage protecting your business from accusations of negligence that caused hardship to other parties.
First-party insurance covers expenses such as incident response, forensic investigation, notification costs, ransom, and business interruption. Third-party coverage is for legal fees, fines, and settlements. Unfortunately, there are financial consequences of a breach that no cyber insurance covers: lost business.
The True Cost of a Cyber Breach
We know from the IBM Cost of a Data Breach Report 2023 that the global average cost of a data breach in 2023 was USD 4.45 million, a 15% increase over three years. That number is almost double in the U.S. alone. But much of this cost IS covered by cyber insurance. What about the cost to a business that cyber insurance doesn’t cover?
Publicly traded companies suffered an average decline of 7.5% in their stock values after a data breach, coupled with a mean market cap loss of $5.4 billion. Furthermore, cyber risks can result in a credit-rating downgrade, impacting a company’s ability and cost to secure financing.
What about sales? Significant revenue loss as a result of a security breach is common. Studies show that 29% of businesses that face a data breach end up losing revenue. Of those that lost revenue, 38% experienced a loss of 20% or more. Cyber insurance doesn’t cover that.
The Cyber Insurance You Need:
Given the total cost of a data breach, it’s obvious that the best option for cyber insurance is anything that actually prevents the breach in the first place. Does such an “insurance” exist?
It does. DevSecOps implemented with threat modeling. Your best options for stopping cyberattacks is identifying threats to systems and software before deployment and mitigating them at that point. And that is precisely what DevSecOps with threat modeling does.
And even when a breach does occur, DevSecOps softens the blow. Studied organizations across all industries with a high level of DevSecOps (i.e., with threat modeling) saw a global average cost of a data breach nearly $1.7 million lower than those studied with a low level/no use of a DevSecOps approach.
Just as there is no good reason to not get cyber insurance, there is no good reason to not implement DevSecOps with threat modeling. And one of the easiest ways to get started is with ThreatModeler.
ThreatModeler integrates seamlessly into the CI/CD pipeline, instantly transforming DevOps into DevSecOps. And there are numerous ways to generate threat models with a single click of the mouse. To learn more about ThreatModeler, use this contact form.
