Business Interconnection Drives Cyber-Risk Management

The speed of digital change has outpaced security so thoroughly that cyber threats have become a form of disruption that companies can no longer try to eradicate. They must learn to live with them. Timothy Powell of Zurich says that this translates into a maturing market for cybersecurity services and providers. “This is a continuing evolution of what we have seen with businesses becoming far more interconnected electronically. People are becoming more aware of those risks as a result of this interconnectedness, and that awareness is driving insurance and risk management.” Best practices are essential to minimize data breaches, but the damage done by those attacks can’t be entirely prevented, and commercial cyber policies are not always adequate. Given those conditions, captives are poised to be implemented as the alternative risk financing vehicle for cyber risk. In the future, captives will be looking to insurance-linked securities for backup protection.