Warren Buffet recently made national headlines when he gave hesitant comments about cyber insurance in regards to his company Berkshire Hathaway Inc. Buffet explained that he thinks cyber insurance is too new, and he would rather forgo the protection and assume any possible costs as a result of a data breach.
But is this outdated and dangerous thinking?
Recent statistics reveal that the cyber security industry will reach the $181.77 billion by 2021. And Deloitte has just announced that they will spend $600 million on cyber security in the next 3 years in an attempt to strengthen their defenses in the wake of their 2017 data breach which could have impacted many of their high-profile clients.
"Operating without cyber insurance in this day and age is unwise. From Equifax to Yahoo! to Verizon, it’s clear that no industry and no company, no matter how large, is safe from cyber criminals. Yet only about half of United States companies have cyber insurance, and nearly 30 percent of companies say that they have zero plans to purchase cyber protection plans in the future.
That is a troubling trend, says Harris, who is a partner at Taft Stettinius & Hollister LLP. Companies who operate without cyber insurance assume that they can survive a data breach, but we are reaching a point where cyber hacks could sink a firm, says Harris.
While business leaders like Warren Buffet are geniuses at making a profit, many people are woefully uninformed about technology. It’s true that the cyber insurance industry is very new, but that doesn’t mean that companies should sit on the sidelines and take a ‘wait and see’ approach. Instead, they should seek out experts who DO know the industry and have the experience and education to protect your company and your clients.
Cybercrime only continues to increase by the day, yet many companies and government bodies are still doing very little to protect themselves. Here, Marcus Harris, a software attorney and partner at Taft Stettinius & Hollister LLP explains why so many people are hesitant to commit to cyber protection, and how this watch-and-wait approach could majorly backfire.
Cybercrime Is Costing U.S. Billions, So Why Aren’t We Doing More to Protect Ourselves?
The New York Times has called cybercrime "one of the world’s fastest-growing and most lucrative industries." And no wonder. Cybercrime has increased by 30 percent in just a handful of years, and globally we lost $455 billion in 2017 due to online attacks. In the United States, it is estimated that cybercrime cost victims at least $1.4 billion last year.
So why aren’t we doing more to protect ourselves?
Put simply: People are afraid of what they don’t know, and cyber insurance and cyber protection are still the Wild West in the business world.
The recent comments made by business mogul Warren Buffet in which he infamously stated "We don’t want to be a pioneer on this" in regards to cyber insurance.
Yet this wait-and-watch technique could prove drastically harmful.
While it is impossible to ever end cybercrime, investing in cybersecurity is the smartest thing a company can do. Simple things like investing in improved email technology can help to curtail a vast number of cybercrime, as people won’t receive these scams in their inbox to begin with.
Owning cyber insurance and having a data breach action plan is absolutely imperative. At this point, operating without cyber insurance is like owning a home without fire insurance. To that end, companies also need to have an action plan that they can immediately put into place if and when a cyberattack ever occurs. Every upper level executive needs to have an awareness of this plan and their role in enacting it. It’s time to start taking cybercrime seriously before we lose billions more to this epidemic.
Resources
Cyber Security Market Size Will Reach $181.77 Bn by 2021: Zion Market Research. According to the study by Zion Market Research, the global cyber security market is expected to grow at a CAGR of 9.5% between 2016 and 2021. The market revenue of $105.45 billion in 2015 is expected to grow up to $181.77 billion by 2021. The cyber security market is one of the highest growing markets in the information technology domain and it yields large economic opportunities. Growing risks such as computer hacking, software piracy and virus deployment are increasing the demand for cyber securities services. https://globenewswire.com/news-release/2018/05/08/1498589/0/en/Cyber-Security-Market-Size-Will-Reach-181-77-Bn-by-2021-Zion-Market-Research.html
CyberScoop.com. Only half of U.S. firms have cyber insurance, fewer than in U.K., Canada. By Written by Shaun Waterman. Posted June 1, 2017
About half of U.S. businesses say they don’t have cyber risk insurance, compared to fewer than a third in the U.K. and Canada, and the health care sector is lagging the worst, according to a recent survey. The data, released by credit-scoring and data analytics giant FICO and market researchers Ovum, comes from a telephone survey of IT and security executives from a broad range of companies in the financial services, media, e-commerce and retail, telecommunications and health care sectors in North America and northwestern Europe. The 350 companies ranged in size from fewer than 1,000 employees (30 percent) to over 10,000 (25 percent) with nearly 45 percent) somewhere in between. https://www.cyberscoop.com/half-u-s-firms-cyber-insurance-fewer-u-k-canada/
Insurance Journal. Why U.S. Firms Have No Plans to Buy Cyber Insurance. Posted May 31, 2017. A Full 50 percent of U.S. firms do not have cyber risk insurance and 27 percent of U.S. executives say their firms have no plant to take our cyber insurance, even though 61 percent of them expect cyber breaches to increase in the next year. Even amount those that have insurance, only 16 percent said they have cybersecurity insurance that covers all risks. The U.S. lags behind the UK and Canada, where about 40 percent have no cyber coverage. Mistruct about insurance pricing is one reason some firms aren’t buying. These findings come from a survey conducted by research firm Ovum for Silicon Valley analytics firm FICO. https://www.insurancejournal.com/news/national/2017/05/31/452647.htm
The New York Times. Banks Adopt Military-Style Tactics to Fight Cybercrime. By Stacey Cowley, May 20, 2018. https://www.nytimes.com/2018/05/20/business/banks-cyber-security-military.html
About the Author: Mr. Harris, a software attorney and partner at Taft Stettinius & Hollister LLP, has developed one of the nation’s leading practices devoted to representing clients in lawsuits and threats of lawsuits involving failed ERP software implementations. Mr. Harris is a frequent speaker on, and has taught continuing legal education courses on, enterprise software- and technology-related issues. For more information, please visit https://www.taftlaw.com/people/marcus-s-harris.