Businesses risk 'catastrophic financial losses' from cyber-attacks, US watchdog warns

Companies threat ‘catastrophic monetary losses’ from cyber-attacks, US watchdog warns

A authorities watchdog has warned that personal insurance coverage corporations are more and more withdrawing from protecting damages from main cyber-attacks, leaving US corporations dealing with “catastrophic monetary losses” until one other insurance coverage mannequin might be discovered.

The rising problem of protecting cyber threat is printed in a brand new report from the Authorities Accountability Workplace (GAO), calling for a authorities evaluation of whether or not a federal cyber insurance coverage possibility is required.

The report attracts on risk assessments from the Nationwide Safety Company (NSA), Workplace of the Director of Nationwide Intelligence (ODNI), Cybersecurity and Infrastructure Safety Company (CISA), and the Division of Justice to quantify the danger of cyberattacks on essential infrastructure, weak applied sciences that may be attacked and a variety of risk actors that may exploit them.

Citing an annual risk evaluation launched by the ODNI, the report finds that hacking teams linked to Russia, China, Iran and North Korea pose the best risk to U.S. infrastructure — together with sure non-state actors resembling organized cybercriminal gangs.

Given the vast and more and more expert vary of actors prepared to assault US entities, the variety of cyber incidents is rising at an alarming price.

“Whereas federal companies shouldn’t have a complete stock of cybersecurity incidents,” the report reads, “a number of main federal and industrial sources (1) present a rise in most varieties of cyberattacks in the US, together with these involving essential infrastructure, and ( 2) important and rising prices for cyber assaults.”

In 2016, US corporations and authorities companies have been affected by a complete of 19,060 incidents throughout the 4 most important classes — ransomware, knowledge breaches, company e mail compromises and denial of service assaults — with a complete price of $470 million, in line with a GAO evaluation from FBI experiences. . In 2021, there have been 26,074 incidents and the overall price was almost $2.6 billion.

The report additionally cites particular incidents which have had a spillover impact on the economic system at massive, most notably the colonial pipeline cyber-attack that took a 5,500-mile fuel-transport operation offline. In that assault, the pipeline operator paid a $4.4 million ransom to the hackers — regardless of legislation enforcement’s recommendation that ransom calls for ought to at all times be rejected.

Horrified by the opportunity of having to cowl such massive losses, personal insurers are pulling out of the market by excluding a few of the most refined cyber-attacks from insurance coverage coverage protection. Whereas knowledge breaches and ransomware assaults are nonetheless typically coated, the report finds that “personal insurers have taken steps to mitigate their potential losses from systemic cyber occasions”, refusing to cowl losses brought on by cyber warfare or deliberate focusing on of infrastructure. .

In line with the US Treasury Division, some insurers have additionally restricted their publicity by decreasing the utmost quantity a coverage pays out within the occasion of a cyber-attack and/or rising premiums in an effort to guard themselves from losses. There’s additional proof that some insurance coverage corporations are fully withdrawing from protection in infrastructure sectors, the GAO discovered, which rated the danger of an assault as too excessive.

Total, the GAO report means that CISA and the Federal Insurance coverage Bureau conduct a assessment to evaluate whether or not the above elements necessitate a federal insurance coverage response alongside the strains of FDIC financial institution deposit insurance coverage and the Nationwide Flood Insurance coverage Program.

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