Revealed: cyber, D&O insurance increasingly interconnected

Risk managers are challenged to up insurance arrangements

Revealed: cyber, D&O insurance increasingly interconnected

Risk Management News

By Krizzel Canlas

Cyber insurance and directors and officers (D&O) liability insurance go hand in hand now that company business models increasingly revolve around technology, a new study suggests.

According to a white paper published by Airmic with support from Marsh and AIG, cyber incidents are dramatically on the rise and the risk of cyberattack is a constantly evolving threat. It revealed that, for most companies, there is a recognition that it is not a case of ‘if’ but ‘when’ their organisation will be impacted.

The study outlines that there have already been several high-profile shareholder class actions resulting from cyber incidents, a scenario that puts companies’ D&O policies under the spotlight.

Ultimately, it urges boards to “take a proactive approach to their insurance arrangements, ensuring that individuals and the company have adequate cover in the event of a cyber incident where a company and its senior management may face regulatory investigations or shareholder litigation.”

“As the potential for D&O claims arising from technology failure continues to increase, the quality of your cyber risk management framework will determine how attractive you are to potential D&O insurers,” white paper author and Marsh senior management liability specialist Eleni Petros explained.

“It’s clear that when buying D&O insurance the risk manager needs to take into account the almost-certainty that a cyber incident will impact the company at some point, and ensure senior management is aware of the importance of a robust cyber-security framework and effective insurance,” AIG international financial lines claims head Noona Barlow, meanwhile, noted.

“It is also a great illustration of how good risk management and insurance purchase are two sides of the same coin,” Airmic technical director and deputy CEO Julia Graham added.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!