Beazley warns against ‘false sense of security’ over cyber risk

Global business leaders and insurance buyers risk becoming “desensitised” to cyber threats as they become “distracted” by AI and trying to keep pace with new technology, warns Beazley. Publishing its annual Risk and Resilience Survey, Beazley said cybercrime remains the top cyber and technological threat for 27% of businesses, but this is down from 34% in 2021. The insurer warned businesses against a “false sense of security”, reinforced by the survey’s finding that cyber resilience appears to have dropped. Some 74% of global business leaders said they are at least moderately prepared for a cyberattack, down from 80% in 2021. “The perception that the worst is over, that businesses are immune, or have at least built up a tolerance to the most extreme effects does not match the reality,” said Paul Bantick, group head of cyber risks at Beazley. “Worryingly they [business leaders] appear less concerned by cyber risk than a couple of years ago,” he added. Bantick said this could be a false sense of security after a drop in ransomware attacks following the outbreak of war in Ukraine as cyber gangs splintered. “But this situation is only temporary and should not be viewed as the new normal,” he warned. “Businesses of all sizes and across all industries cannot afford to take their eye off the ball, just at a moment when cyber criminals are starting to look to make up for profits lost over the past 18 months.” Beazley said global business leaders have become “distracted” by AI and new technologies, which has reduced their focus on cybercrime risk. In a survey of more than 2,000 business leaders and insurance buyers in the UK, US, Canada and Singapore with international operations, Beazley said executives are nearly as concerned about keeping pace with new technology, named by 26% of the poll as their top cyber and technological risk for 2023, as they are about cyberattacks. Some 21% of businesses said they cannot maintain the pace of technological change. The survey also revealed that 25% are concerned about AI and disruptive technologies, which are predicted to become a growing risk over the next 12 months. Beazley also tracked a sudden rise in concern about intellectual property theft, which was cited by 24% of business leaders as their top concern, up from 11% in 2021. Beazley found 26% of businesses said they are ill-equipped to mitigate the risk. “The emergence of AI and other tech innovations, as well as the increase in concerns over IP theft, are now front of mind for many business leaders globally. These threats are fast evolving and unfamiliar, with many companies being caught on the back-foot when dealing with the risk,” it said. Beazley said the cyber insurance market is on the cusp of launching a cyber war product offering some cover for a cyber war event, following exclusions from core products. “It is clear businesses now feel more exposed to the risk of cyber war. We must provide a solution to address our clients’ cyber war exposure should they wish to. Most importantly, we must do so together. The insurance industry has a long history of affecting positive change through collective action. By collaborating at this key juncture for the cyber insurance market we can offer insureds clarity and certainty when it is needed most,” Beazley said. Some 36% of businesses surveyed told Beazley they plan to invest in cyber security this year, but Beazley notes this is down from 46% last year. “The risk is not diminishing and for many businesses, particularly those in the middle market, defences are not where they need to be. The widening gulf between how the threat is perceived and the reality is stark,” it warned. “The news agenda should not be used as a barometer of the scale of a particular threat. That AI is in focus now does not make ransomware less of a threat. Deepfakes, which attract the public interest, do not make it the biggest risk overnight. Businesses must ensure they resist the pull from the latest concern and stay on course, focusing on genuine and palpable threats to their operations,” Beazley advised.

Beazley warns against ‘false sense of security’ over cyber risk

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