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The reality of the digital world is unmistakable: no company is safe from cyberattacks. As a result, companies of all shapes and sizes face significant challenges in terms of cybersecurity. The threat level is high and is constantly increasing, as the latest Federal Criminal Police Office (BKA) report makes clear.
The figures are alarming: the number of cybercrimes against the digital infrastructure of companies and institutions in Germany remains high. The increase in attacks from abroad, which have risen by 28% compared to the previous year, is particularly alarming. While domestic attacks are only declining slightly, the cybercrime-as-a-service business is booming abroad and causing billions in damage in Germany.
It is not a subjective assessment that the threat level is high. Numerous other studies and reports support the BKA’s statements. Every company that uses digital services or IT systems is potentially at risk. Despite far-reaching digitalization, many companies often still lack the necessary awareness and resources to protect themselves adequately.
The shortage of IT specialists further exacerbates the situation. Despite the wide range of protection mechanisms, many companies are still unable to take the necessary security precautions to protect themselves against cyberattacks.
How important is cyber insurance in a digital world?
After a loss-making year in 2021, cyber insurers were back in the black in 2022. The combined ratio fell from almost 124% in 2021 to around 78% in 2022, as reported by the German Insurance Association (GDV) in September 2023. Fewer hacker attacks were also reported to insurers, which had a positive effect on the result.
Despite a 5% drop in reported claims to just under 2,900 cases, the average claim amount rose from 37,000 euros to 42,000 euros, which caused total benefits to climb by 8% to 121 million euros. At the same time, the premium volume increased by 56% to 249 million euros, underlining the continued importance and growth of the cyber insurance market.
Munich Re’s third Global Cyber Risk and Insurance Study sheds light on cyber threats to companies and the growing need for transparent insurance solutions. Despite increased risk awareness, 87% of the 7,500 respondents do not believe that their company is sufficiently protected against digital threats – a significant increase compared to 2022 (83%). The study shows that the insurance gap remains large, underlining the urgent need for comprehensive cyber insurance solutions.
Technology trends and their risks: How are AI and cloud services impacting cybersecurity?
Another key finding of the study is the growing importance of technology trends such as artificial intelligence (AI), cloud services, and data analytics across all industries. With these technological advances, vulnerabilities and security gaps are also increasing, which require proactive measures to protect against cyberthreats. Munich Re estimates global cyber insurance premiums at around USD 14 billion in 2023, a figure that is expected to rise to around USD 29 billion by 2027. These figures show that the importance of cyber insurance is increasingly being recognized. Nevertheless, much remains to be done to close the gap between insured and economic losses.
However, one in two insurance applications from companies with a turnover of over EUR 10 million is now rejected due to inadequate IT security, as Payam Rezvanian, member of the management board at Finanzchef24, explained in an interview published in April 2024. Insurers are demanding that companies arm themselves better against cyberattacks.
Challenges for companies: What are the biggest obstacles in cybersecurity?
Many companies underestimate the risks they are exposed to. These risks include not only the direct threat of cyberattacks, but also the potential damage that such attacks can cause. According to Bitkom, cyberattacks in Germany alone caused damage amounting to 148 billion euros in 2023. This sum illustrates the urgency of protecting oneself adequately.
Practical measures to improve cybersecurity: what can companies do specifically?
Companies need to take various measures to ensure their cybersecurity:
- Improve IT infrastructure and processes: A robust IT infrastructure and clearly defined processes are essential. This includes preventative measures, risk management, emergency plans, and continuous monitoring of systems.
- Prioritize prevention and training: Employee cybersecurity training and regular updates to IT systems are critical. The use of cryptography and other encryption systems should be integrated as standard.
- Promote transparency and collaboration: Insurers require companies to be transparent about their security measures. Companies must be willing to cooperate with insurers and continuously improve their security standards.
Management responsibility: Why must cybersecurity be a top priority?
Cybersecurity should be a management issue. Companies cannot afford to treat this issue casually, as negligence is not tolerated by legislators and insurers. Comprehensive cyber insurance presupposes that the company has already taken preventive measures and is continuously working to improve its security standards.
Conclusion: Why is cyber security essential for securing the future of companies?
Digitalization brings many benefits, but also considerable risks. Companies need to take the threats seriously and take appropriate measures. Cyber insurance can make an important contribution to protection, but it is no substitute for a solid IT security strategy. Management must put the issue of cybersecurity on the agenda and start implementing preventive measures immediately. This is the only way for companies to minimize risks and secure their future.
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Cyber insurance is no substitute for a strong IT security strategy. Put cybersecurity at the top of your agenda and start taking preventative measures now. Contact us today and secure the future of your company.
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