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Lloyds won’t cover nation-state attacks: What this means to enterprises

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Data breaches arent cheap. With the average breach costing $4.24 million, many organizations are embracing cyber insurance to diminish the financial impact of security incidents. However, insurers are starting to lose confidence in the power of the insurance market to soak up the chance of an extremely complex threat landscape.

Just the other day, for instance, Lloyds released a bulletin announcing that starting March 2023, all cyber plans must exclude liability for losses due to any state-backed cyberattack.

The explanation behind your choice is that nation-state attacks could expose the marketplace to systematic risks while losses have the potential to greatly exceed what the insurance market can absorb.

If other insurance agencies follow suit, enterprises wont have the ability to depend on cyber insurance to safeguard themselves contrary to the financial impact of data breaches due to state-sponsored threat actors.

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Cyber insurance cant cover a cyberwar

Lloyds decision to narrow cyber insurance plan is apparently a recognition that the threat landscape has spiraled uncontrollable amid the Russia-Ukraine war as nation-states on both sides of the conflict innovate new threats.

Because the war continues, its becoming more and more clear that the impact isnt limited by countries directly mixed up in conflict, but to organizations around the world.

New research released this week revealed that 64% of security decision-makers over the US, UK, France, Germany, Belgium, Netherlands and Australia suspect their organization has been directly targeted by way of a nation-state cyberattack.

With nation-state attacks increasing and insurance plan narrowing, enterprises will have to review their policies to make sure theyre not left subjected to financial risk.

Its another exclusion that enterprises will have to focus on within their cyber insurance coverage, section of a trend of continued tightening of coverage and affirmative language in what is covered (rather than covered), said Forrester principal analyst Heidi Shey.

Among the requirements of Lloyds decision is that terms are clearly defined. It’ll be interesting to observe how and what insurers will consider as attribution for a nation-state attack. Enough time lapse between an attack and attribution (if feasible) to a nation-state can be an issue, Shey said.

Is attributing nation-state attacks practical for insurers?

Despite the fact that Lloyds intends to remove coverage of nation-state attacks, many commentators believe this policy is unenforceable, because the provider will need to prove a cyberattack was authorized by way of a particular state.

Predicated on their bulletin, it could require the attacked company to declare it a nation-state event, which may not work nicely. It begs the next questions at what point could it be a nation-state directly attacking the covered organization, and who makes that determination? said David Lindner, CISO at Contrast Security.

Attributing these attacks can be difficult, particularly if attackers walk out their solution to disguise their identities.

Attributing attacks to specific perpetrators on an excellent day is difficult on the net, where identities could be easily disguised through the use of TOR routers, bot networks along with other obfuscation techniques, said James Turgal, VP of cyber risk, strategy and board relations at Optiv.

Turgal says that there surely is an underground marketplace of initial access brokers (IABs) that nation-states can ask to execute any segment of a cyberattack, from the original intrusion to establishing lateral movement in a network.

While you can find tactics, techniques and procedures (TTPs) utilized by certain nation-states that enable some extent of attribution, only highly sophisticated, investigative techniques utilized by U.S. police and intelligence community members just like the FBI, CIA, or NSA can usually detect such specific TTPs, Turgal said.

These techniques may also be highly classified and so are unlikely to be distributed to an insurance provider to create policy decisions.

Dont depend on policy ambiguity, but data protection

From the risk management perspective, organizations cant afford to depend on cyber policies in this realm being unenforceable.

In the end, the ambiguity over what takes its state-sponsored attack can cut both ways, especially if an insurance carrier and a business disagree over whether an attack was authorized by way of a particular government.

The only method to make sure protection against these kinds of threats would be to prioritize data security, while implementing zero-trust access to make sure that threat actors cant access mission-critical data.

Organizations must mitigate cyber-risks through constant backups to make sure data could be restored,and in addition utilize proven data-centric security to foil the attack itself, said cybersecurity expert and data security specialist at comforte AG, Erfan Shadabi.

Lindner also recommends that organizations implement data redundancies, including backup and archiving to make sure that data is recoverable if its compromised, alongside implementing a data management framework and creating a security awareness training curriculum for new and existing employees.

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