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How Insurance Companies Can Incorporate Cyber Risk Analysis into Their Business Continuity Management Plan

How Insurance Companies Can Incorporate Cyber Risk Analysis into Their Business Continuity Management Plan

The insurance industry is amongst the most complex when it comes to risk management, seemingly with threats approaching from every angle. In fact, insurance dwells within a sector where the business model has a significant in-built element of risk — risk factors that can only be partially mitigated, if at all. 

The National Association of Insurance Commissioners reports that insurance fraud costs consumers nearly $310 billion annually. Insurance premiums are heavily affected by this fraudulent activity, with the average household paying an extra $400 to $700 per year as a direct result of insurance fraud incidents. 

To compound matters, insurance companies must also deal with risk factors that exist beyond the cybercrime realm. For instance, policyholders may attempt an insurance scheme by submitting fraudulent claims. Whatever the case, it’s clear that insurance companies face a complex dynamic when it comes to cybercrime threats. But there are measures that empower a business, such as incorporating cyber risk analysis in the development and management of a business continuity plan. 

What is a Business Management Continuity Plan? 

A business continuity management plan is an essential component of an insurance company’s risk management strategy. A business continuity management plan — or BCPs — outline protocols, procedures, and step-by-step processes that can be deployed in the event of a disaster or other adverse event, such as a cyberattack. 

At its most basic level, a business continuity management plan is comprised of several components with an overall objective to create an outline of mission-critical functions and processes. Once this is established, you must prioritize systems and functionalities, identifying which technologies are most critical. Then, you’ll be positioned to develop a step-by-step overview of how to restore those mission-critical systems on the heels of a cyberattack event. 

A business continuity management plan is comprised of several components. 

  • An outline of risk factors, including those that are immediately present and those that may arise in the future. 
  • An analysis of the risks and how they would impact the insurance company in part and/or as a whole. 
  • A step-by-step action plan that details the insurance company’s response to a specific type of event. 
  • An overview with a prioritization of the insurance company’s most essential, mission-critical systems. 
  • An outline of roles and responsibilities and how they ought to play out when a cyberattack incident occurs. 
  • A recovery plan can be deployed as soon as the cyber threat is neutralized. 

Additionally, many insurance companies will opt to hold dry runs that allow staff to more fully understand their role and responsibilities when a cyber threat arises. 

The Dynamic of Cyber Risk and Insurance Companies

Insurance companies are at very high risk of being targeted by cybercriminals and other bad actors. This is, in part, due to the large volumes of data that insurance companies typically keep on file. In fact, many insurance firms are required to retain documents and various other types of data for a predetermined amount of time, lest the firm receive fines and penalties for regulatory non-compliance. Without proper protection, these data stores may come under attack as part of a data breach or ransomware incident. 

Cyberattacks commonly target data stores such as those that are retained by insurance companies. The data can be sold as-is or the cybercriminal may leverage it directly by committing crimes such as identity theft. An increasing number of cyberattacks also entail data theft, with criminals using ransomware to hold data hostage in exchange for a fee.

How Can Insurance Companies Incorporate Cyber Risk Analysis in a Business Continuity Management Plan? 

The development (or re-development) of a business continuity management plan should include cyber risk analysis due to the ever-increasing prevalence of this threat. However, putting this recommendation into practice can be a challenge. Consider the following as your insurance firm examines cybercrime and its impact on the company both in part and as a whole. 

Identify the types of cyber risk and which risks apply to your insurance company.

Data breaches and data theft are the most common cyber threats for this type of business. But cyber risk takes many forms and there are many that could potentially impact an organization. Take some time to explore the possibilities as you attempt to pinpoint the cyber threats that are most likely to affect your insurance firm. 

Prioritize and rank the cyber risks

to determine which are most likely to affect your insurance company and its interests. This assessment and prioritization process is important because it helps to guide an insurance company’s business continuity management plan. You want to be sure that you’re tackling the most pressing threats and vulnerabilities first. 

Determine the potential impact of the most serious risks and threats.

Think worst-case scenario and all that may ensue. It’s essential that you know which threats carry the highest cost to your insurance company. Which holds the potential to create the worst carnage? The impact could affect a business operationally, strategically, and even in terms of company reputation. You’ll want to deploy risk mitigation efforts for these high-impact threats as soon as possible in the event of a cyberattack. This information is an essential part of a company’s business continuity management plan.  

Develop a strategy for addressing the most serious and pressing cyber threat

as identified in your cyber risk analysis process. With this information integrated into your business continuity management plan, you’ll be better positioned to deploy an action plan when the need arises. 

Consider legal and regulatory compliance

How they affect various cyber risks. Insurance companies are highly regulated. These businesses are required to follow stringent guidelines in order to maintain both legal and regulatory compliance. In fact, non-compliance can be very costly both from a financial standpoint and from a strategic standpoint. Therefore, it’s important that you pay special attention to any and all risk factors that involve or impact regulatory compliance. 

Conditions that create an area of vulnerability can easily affect an insurance company’s compliance. For example, sensitive data — which is highly likely to be targeted in a cybercrime event — must be collected, stored, and managed in a very specific manner if the company is to be considered compliant. With this in mind, your business continuity management plan will need to address this type of vulnerability. You’ll need a solution that allows you to maintain operational continuity without creating new problems in the realm of legal and regulatory compliance. 

On the whole, cybersecurity really does play an essential role in maintaining regulatory compliance, making it a critical point of consideration. You don’t want to put out a fire in a way that sparks two more. Develop a strategy so you don’t deploy a solution that causes compliance issues. 

Putting Risk Management Software to Work for Your Insurance Company

With a complicated risk management landscape, insurance companies really need a software solution to succeed. Today’s best platforms feature a broad range of tools and functionalities that allow a business to identify, assess and prioritize threats and risk factors. Those risk issues can then be addressed directly or as part of the company’s broader risk management initiatives. 

Risk management software is one of our specialties here at iTech. With a collaborative approach, our team will work directly with the client to gain a full understanding of their challenges, pain points, and obstacles. Then, the iTech team gets to work on architecting a solution that minimizes risk and reduces vulnerabilities. We invite you to contact us today to begin a dialogue on how iTech can help reduce your vulnerability to cyberattacks and the other threats that are confronting your insurance company.