Most US publicly traded companies now employ cybersecurity insurance to protect them from liability fallout, and 90% believe regulators should hold companies liable for breaches if they didn't properly secure their data.
The heat is also on third-party software vendors: 90% of the companies say those suppliers should be held liable for vulnerabilities found in their software, and 65% have either already or are planning to include liability clauses in their contracts with their software suppliers.
Meanwhile, 91% of companies that have cybersecurity insurance have protection for business interruption and data restoration; 54% for expense reimbursement for fees such as PCI fines, breach notification, and extortion. Some 35% say they want coverage for software coding and human error causes for data loss, according to a survey of some 276 board directors or senior executives by New York Stock Exchange (NYSE) Governance Services and Veracode.
Some 52% say they are buying employee/insider threat liability coverage. Coding and human error are rising on their radar screens: "I was surprised that 35% already are [seeking] insurance for coding and human errors. That number will increase, when there's standardization around what that means," says Chris Wysopal, co-founder and CTO of Veracode. "The insurance industry will drive the standards."
Wysopal says cyber insurance is becoming the norm for recovering costs of rebuilding and cleaning up after a breach. "The really important thing about cybersecurity insurance is it's really going to [define] best practices. You have regulators like the FTC … and SEC … talking about what they think is best," he says, and cyber insurance policies will likely "piggyback" off of those recommendations and influence what gets covered.
Deborah Scally, who heads up NYSE research, says cyber insurance is more pervasive than you'd think. "There's always insurance in place. You may not even know if you're covered [for cybersecurity] under your larger policies," she says. "We're going to be interested in looking at where this goes. We're kind of at the beginning states of that right now."
Some 90% of execs believe the Federal Trade Commission and other regulatory bodies should indeed hold businesses liable if they don't practice due diligence in data protection. And more than half anticipate that their shareholders will expect more transparency about cybersecurity.
"Boards are concerned about brand damage," Wysopal says.