By: Olivia Nnorom
In today’s digital age where businesses of all sizes are increasingly reliant on technology and the internet to operate, understanding the increasing cyber risks and why Cyber Insurance is all the more important for businesses’ security and success is paramount.
Sophos, a United Kingdom-based cybersecurity solutions firm, in a report titled ‘The State of Ransomware” highlighted that cyber risk increased from 22 percent in 2020 to 71 percent in 2021.
Out of the 71 percent of Nigerian organisations hit by ransomware, the report stated that 44 percent were forced to pay ransoms to get their data back.
Also, a 2022 report by Allianz Risk Barometer, showed that Cyber perils are the biggest concern for companies in Nigeria, other African countries, the Middle East and around the world.
“The threat of ransomware attacks, data breaches or major IT outages worries companies even more than business and supply chain disruption, natural disasters or the Covid-19 pandemic, all of which have heavily affected firms in the past year” the report said.
Recently, the prestigious Babcock University was hit by an attack where the hackers took charge of the school’s website for several hours and allegedly demanded for a ransom.
Federal University of Technology, Owerri, Imo State and many universities have had a similar experience.
In many cases, these attacks are in the bid to gain unauthorised access to sensitive data, such as passwords, credit card details and personal user information for negatively impacting use.
Evidently, cyberattacks, data breaches, and other cyber threats can cause significant financial and reputational damage to businesses. This is where cyber liability coverage comes in.
Cyber insurance helps businesses recover from cyberattacks and other technology-related incidents. It can cover a range of expenses, including the cost of investigating a data breach, notifying affected customers, and providing credit monitoring services. It can also cover legal fees and penalties, and loss of income due to a cyberattack.
Unfortunately, despite the fact that Nigeria is one of the top countries subjected to cybercrimes, there is no known operational insurance company that offers policies to protect organisations from information technology-related risks. Experts said Nigerian industry players are not well-positioned to tap into the avenue as cyberattacks continue to target data, especially with the increase of tech start-ups and establishments in the nation.
According to Umar Danbatta, Executive Vice Chairman of the NCC, who addressed the attendees of a two-day symposium in Abuja, the cyber insurance policy that was intended to cover all costs and expenses incurred as a result of a breach, has failed. Experts say a lack of understanding and awareness of the product or a lack of incentive for insurance providers to offer cyber insurance products for the Nigerian market account for the lack of growth in Nigeria.
Why Nigeria must key in
Beyond the increased cases of cybercrime and internet-based losses, reports have noted that the cyber insurance space is poised for growth in its value.
The value of cyber insurance premiums globally is projected to reach $20 billion by 2025, data by Statista revealed.
According to Fitch Rating;
Cyber insurance will have its global worth estimated to increase to over $28 billion before 2026 as organisations that pay ransom after a Ransomware attack would be 51 percent.
This is to say that the cyber insurance sector will follow a rising trend in terms of profitability, in the coming years.
Finally, cyber-attacks will continue to grow over the years and a weak or vulnerable area in an operational entity is all that is needed to suffer damaging exposure to data privacy and information.
Therefore, there is an urgent need for businesses to incorporate cyber insurance as a form of resilience to risk into their strategic objectives, while Nigerian insurers should prioritise creating suitable cyber insurance policies to key into the growing sector of the industry.