Most cybersecurity breaches go unreported, uninsured despite executive concern: Barclays

Nearly three-quarters of cyberattacks are going unreported even as a flood of data and fraudulent attacks sees executives losing control of their sensitive corporate data, according to a new UK survey that confirms Australia isn't the only place where cybersecurity is spiralling out of the control of business leaders.

The new survey, conducted in December 2015 amongst 980 respondents by the UK-based Barclays Bank and Institute of Directors (IoD), reinforced a perceptual disconnect recently identified by security-industry group ISACA, which found that 82 percent of surveyed CISOs agreed that their boards of directors are concerned or very concerned about cybersecurity – but that only 1 in 7 of those CISOs reports to the CEO.

The Barclays-IoD work found a similar disconnect: although they purported to recognise the importance of cybersecurity defences – 91 percent said cybersecurity was “important to their organisation” – only 57 percent of respondents said their business had a formal cybersecurity strategy and just 49 percent said they provided cybersecurity awareness training for staff.

Once an attack had hit, the executives reported a range of consequences: while just 11 percent of attacks caused an actual financial loss, fully 49 percent caused interruption to the business.

Many of the companies facing these consequences will increasingly turn to cybersecurity insurance policies to minimise the consequences of such issues. In a recent analysis, security giant Symantec was among those predicting 2016 would be a turning point for cyber insurance: “as another layer of protection, particularly as cyber attacks start mirroring physical world attacks.”

Despite this trend, cybersecurity insurance remains a nascent industry in Australia, although some believe it will take off if mooted mandatory breach reporting legislation escalates such reporting from being a privacy best-practice to being a legal requirement.

“Cyber insurance offers organisations protection to limit their risk, but companies should consider all coverage options carefully,” Symantec's analysis warned. “It’s not about checking off a box; it’s about finding a policy that protects an organisation’s brand, reputation, and operations if faced with a breach.”

Just 20 percent of the respondents to the Barclays-IoD survey confirmed that they have cyber insurance, with 21 percent considering taking out such a policy within the next 12 months. But that could reach 90 percent a year from now, the report's author professor of cyber security management Richard Benham wrote, as cyber attacks intensify and business implications continue to mount.

”With the threat of cyber attacks becoming more frequent and some household names providing credible case studies, it is no surprise that many are predicting that cyber insurance cover will become a 'must have' for business,” he wrote, predicting that IT and cloud providers will begin issuing cyber-insurance policies as standard.

“Any organisation is taking an unnecessary risk by avoiding this step,” he said, “but even then cyber insurance is no silver bullet.”

Better incident-response mechanisms will be crucial for businesses to reduce the damage from cybersecurity attacks. A recent xMatters-Dimensional Research report on incident response practices found that nearly 60 percent of the 400 surveyed businesses experience major incidents at least monthly, but only 52 percent have a major incident team and 76 percent frequently miss their targets for recovering from such outages.

This, despite the fact that 95 percent of the companies considered a security breach to be a major incident – yet the Barclays-IoD survey found that just 28 percent of attacks were reported to the police. This low figure was attributed to “the challenge of tracking and punishing criminals” despite reiterating that every cybercrime should “as a minimum be reported to Action Fraud Aware”, the UK's national reporting centre – analogous to the Australian Cyber Security Centre and ACORN cybercrime-reporting network.