Business insurance practices are out of date: spending on property-related risk is four times higher than cyber risk
- Published: Thursday, 19 October 2017 07:34
The 2017 EMEA Cyber Risk Transfer Comparison Report, released by Aon in collaboration with the Ponemon Institute, found that organizations recognize the growing value of technology and data assets relative to historical tangible assets, though they are spending four times more budget on insurance for property, plant and equipment (PP&E) risks.
The report found that while 38 percent of businesses surveyed confirmed they have experienced a cyber loss in the past 24 months, only 15 percent of their probable maximum loss (PML) is covered by insurance. This is in stark contrast to the policy limits purchased against physical assets like PP&E, where around 60 percent of their PML is typically covered. The report also shows that the impact of business disruption to information assets is 50 percent greater than to PP&E.
Vanessa Leemans, chief operating officer for Global Cyber Insurance Solutions at Aon commented: "This study compared the relative insurance protection of certain tangible versus intangible assets. We found that most organizations spend much more on fire insurance premiums than on cyber insurance, despite stating in their publicly disclosed documents that a majority of the organization’s value is attributed to intangible assets.”
The report also found that only 30 percent of businesses are ‘fully aware’ of the legal and economic consequences of the European Union General Data Protection Regulation (GDPR).
Vanessa Leemans concluded: “With 65 percent of EMEA organizations expecting their cyber risk exposure to increase over the next two years, cyber risk needs to be approached at an enterprise-wide level in order to achieve cyber resilience. This should include enterprise-wide education, assessment and quantification, preventive risk management, incident response plan, as well as cyber insurance.”