When it comes to protecting your organization from cyber threats, Managed Detection and Response (MDR) services are a must. But many businesses overlook the importance of compliance and insurance needs associated with cybersecurity. Without them, you may find yourself financially and legally vulnerable in the event of a security incident.
Compliance and insurance requirements differ depending on the region and the size of your business; not understanding or following these regulations can result in hefty fines and other financial repercussions. On top of that, without the right cyber insurance coverage, you may be footing the bill for any breaches or incidents that occur.
Protect your business by understanding industry cybersecurity compliance and regulations requirements
It is essential to gain an understanding of relevant regulations in your jurisdiction and industry standards like the Payment Card Industry Data Security Standard (PCI-DSS) or the Health Insurance Portability and Accountability Act (HIPAA). Depending on your business, you may also need to comply with other regulations, including General Data Protection Regulation (GDPR).
Regulations may require your company to have specific technical and organizational measures to protect sensitive information, such as data associated with payment card transactions or protected health information (PHI). Companies that operate in the European Union (EU) must also comply with the GDPR, which requires companies to protect personal data collected from EU citizens.
Companies that fail to adhere to industry standards and regulations associated with compliance can face serious financial repercussions. Depending on the jurisdiction, non-compliance can result in steep fines or other sanctions. For example, companies not complying with the GDPR may face fines of up to 4% of their annual total revenue, while failing to comply with PCI-DSS could result in significant losses due to increased risks of credit card fraud. Your company may suffer from increased liability if they experience a data breach due to a lack of appropriate security safeguards. That is why it is critical for your company to choose an MDR provider who understands your specific industry standards.
Stay secure by investing in cyber insurance coverage
Compliance is not enough. You should ensure that your company has adequate cyber insurance coverage to reduce any financial burden in case of a breach or incident. Cyber insurance provides your company with coverage for costs related to investigations, forensics, and legal fees that may need to be paid to determine the cause of a breach and mitigate any potential damages. This insurance also protects against possible damages from external threats or malicious actors such as ransomware attacks, data leaks, or stolen customer data.
According to a 2022 middle market cybersecurity survey by the RSM and the U.S. Chamber of Commerce, "cyber insurance continues to be a key element of cybersecurity strategies for the majority of middle market executives" and 61% of companies that responded to the survey carry such a policy. [1]
In the event of a security incident, having cyber insurance ensures your business will not have to bear the cost of the necessary steps to ensure customer data's integrity and privacy. It also gives your company access to experts in the field of cybersecurity who can provide advice, guidance, and support throughout a security incident.
Insurance coverage will protect your company from potential damages from external threats or malicious actors, such as ransomware attacks, data leaks, or stolen customer data. Look for a policy that compensates you if you are affected by cyberattacks with regard to financial losses, regulatory fines and penalties, business interruption costs, reputational damage, a loss of customer loyalty due to an attack, and more. Determining the right level of coverage for your company is crucial - and it is essential for you to understand the details of the policies and where there might be gaps.
A well-defined cyber insurance policy can help your company recover quickly from a breach and secure critical systems and sensitive data. If your company has not needed direct support from a cyber insurance provider, it is still likely that you know a company that averted a disaster because of a timely response by an insurer-approved breach coach and forensic investigator immediately after a breach. With the changes in the market, though, you must be sure that your company's controls keep up with insurer expectations to qualify for a policy.
Costs of cybersecurity insurance are increasing. Is it still worth it?
Given the current risk landscape, most middle market companies have run into rising cyber insurance costs, according to the 2022 middle market cybersecurity survey by RSM and the U.S. Chamber of Commerce. In the survey, 67% of respondents said their policy premiums increased compared with their prior period, and only 2% said they experienced a decrease. [1]
However, the report also showed that more risks are being covered for the majority of middle market businesses. That is, 52% of respondents saw covered risks increasing either somewhat or significantly in their new policy period.
Despite the rising costs, having cyber insurance is still an extremely valuable protective tool for your company. If a breach does occur, an effective policy can significantly help lessen your financial, reputational, and regulatory impact and accelerate the recovery process.
How your MDR provider should work with your insurance provider
When evaluating a potential insurance provider, ask your MDR partner if they are already an approved incident response provider by that insurance company. Moreover, you should inquire whether your MDR provider has a process for engaging with your insurance carrier - and what that process is - to ensure they can move quickly in the event of an incident.
If you are looking for more information on how to choose the right MDR provider to meet your company's unique needs, download our MDR eBook, "Ten Essential Questions to Ask When Evaluating MDR Services."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
