Cyber Insurance Becomes Essential Amid Rising Digital Threats
Cyber Insurance Becomes Essential Amid Rising Digital Threats
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The recent cyberattack on Fortnum Private Wealth, accompanied by ASIC's legal action, has spotlighted the critical risks cyber threats pose to financial advice companies in Australia.
With digital integration intensifying across the finance sector, the owner of Fortnum, Entireti, plans to defend the case, underscoring the necessity for ongoing vigilance in cybersecurity measures.
Fraser Jack from Cyber Collective emphasises that cyber insurance has become indispensable for businesses. With regulatory requirements mandating recovery capabilities post-cyber incidents, advice practices face expenses they often cannot anticipate or manage without insurance. Cyber events can incur hefty legal bills, demanding extensive forensic IT and accounting work, not to mention significant financial losses caused by deceptive acts such as misdirected transactions or errors involving super fund rollovers.
The average cyber intruder remains undetected in a system for over 200 days, making timely insurance coverage crucial to subsidising response and recovery efforts after an attack is identified. However, Jack advises that while insurance offers vital protection, it should not be the sole defence mechanism. Businesses need a comprehensive approach starting with robust internal controls, adherence to compliance protocols, and extensive training to diminish human error risks, which are responsible for nearly all breaches.
Financial adviser Jenny Brown of JBS Financial Strategists stresses the importance of cyber protection, lamenting the hefty repercussions on reputation and finances should a breach occur. For her, spending a modest insurance premium is a prudent measure given the extensive use of online tools and the potential for significant repercussions without it. Brown highlights the need to review what cyber policies cover, especially in conjunction with management liability and professional indemnity insurance, to ensure no areas are left unprotected.
The necessity for robust cybersecurity strategies was amplified for JBS Financial Strategists during Melbourne's COVID-19 lockdowns as the firm transitioned to 100% remote work. The firm's reliance on technology and the internet required rigorous security protocols, including monthly staff training and stringent system access restrictions, to safeguard against phishing scams and other vulnerabilities.
Brown underscores that while measures like cyber insurance and ongoing training offer a level of security comfort, complacency is dangerous. Regular practice and awareness-building among employees bolster protection for the business and its clientele against inevitable cyber threats.
Businesses must take proactive steps now. Fortifying cyber defences through insurance, stringent controls, compliance diligence, and continuous staff education can curtail potential damages and safeguard against emerging cyber threats in this increasingly digital world.
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Knowledgebase
Proximate Cause: The primary cause of loss in an insurance claim, which sets in motion a chain of events leading to the damage or injury.
