Boardrooms feel unprepared for global cyber risks despite growing threats: Beazley

• A quarter (25%) of US business executives feel unprepared to deal with cyber risk.
• Over a fifth (22%) of US business leaders cited cyber risk as the number one threat they face this year, down from 28% in 2023.
• As AI technology comes of age, over a quarter (26%) of US boardrooms reported feeling unprepared against the threat of tech obsolescence risks, including outdated technology and missing out on new technology opportunities.

London, UK (Sept. 10, 2024) – Beazley, the leading specialist insurer, is pleased to announce the publication of its latest Risk & Resilience report, Spotlight on Cyber & Technology Risk 2024.

The report details how businesses across the globe perceive the growing threat posed by cyber crime, tech obsolesce, tech disruption and intellectual property risks in today’s era of fast-paced technological innovation.

Over the past year the cyber threat landscape has become more complex for businesses to navigate due to increasing sophistication of cyber criminals’ tactics, aided by AI tools. Beazley’s survey of 3,500 global business leaders revealed that despite the growing risk landscape, global executives have something of a blind spot over cyber risk. 23% of the US executives surveyed ranked cyber as their top risk this year, down from 34% in 2021. As cyber criminals continue to devise and hone their attack tactics, firms need to be on the front foot with their cyber resilience, so it is concerning that 65% of US executives surveyed believe that their existing cyber defenses are currently sufficient to deal with a cyber attack.

Perceived preparedness against cyber risk is also declining. This year, 73% of US business leaders feel resilient against cyber risk, reflecting a significant long-term decline in resilience from 86% in 2022. This dropping sense of preparedness is reflected in the fact that 27% of US businesses plan to invest in cyber security measures this year. In addition, 23% intend to explore insurance options that include risk and crisis management services, which are essential to help businesses to defend and recover from a cyber incident.

AI Friend and Foe 

The advent of artificial intelligence (AI) has presented organizations with immense opportunities to streamline their operations and benefit from efficiency gains. Adoption of AI has been widespread, and 26% of US businesses surveyed are planning to invest in AI and other new technologies to help improve their resilience to risk. AI is also set to have a seismic societal impact, as 59% of US business leaders agreeing that AI will replace jobs in their company.

While AI presents opportunities, the speed of innovation in this space is proving to be a key concern for businesses. 27% of US business leaders cited tech obsolescence risk as their biggest threat this year, with 26% unprepared to manage this risk.

In addition to direct business impact, technology is altering the cyber risk landscape. AI can help cyber criminals refine existing attack techniques, such as phishing, while also giving way to new techniques, such as deepfake attacks. As hackers become more sophisticated and harder to identify, businesses must have effective cyber defenses in place to counter the range of cyber and tech risks that are evolving at speed.

Paul Bantick, Global Head of Cyber Risks, Beazley said: “As our report shows, with technological innovation set to bring about seismic societal change, the growing regulatory burden for firms, and cyber criminals becoming more and more sophisticated, businesses are facing a wave of new threats. The need for robust risk mitigation strategies has never been greater, and insurance can play an important role. By leveraging the vast amounts of claims, incident, and threat information data we have and translating that into actionable guidance and advising on elevated ‘always on’ resilience for a range of cyber and technology risks, we can help clients to better navigate the risks they face today.”

Francisco Donoso, Chief Technology Officer, Beazley Security said: “The increasing sophistication of threat actors has blurred the line between nation-state and criminal cyber activities. This convergence has brought about a new era of unprecedented risks that leave global business leaders feeling unprepared. While investments in protection and defense are essential, security professionals must recognize that security edge devices are increasingly targeted as an entry point in an attack. They should enhance detection capabilities while also focusing on building cyber resilience to ensure readiness to respond to threats as they emerge.”

About the Risk & Resilience research 

During January 2024, we commissioned research company Opinion Matters to survey the opinions of 3,500 business leaders and insurance buyers of businesses based in the UK, US, Canada, Singapore, France, Spain, and Germany.

Survey participants were asked about their views on insurers and insurance, as well as on four categories of risk:

• Cyber & Technology – including the threat of disruption, failure to keep pace with changing technology, cyber risk and IP risk.
• Geopolitical – including strikes and civil disruption, changes in legislation and regulation, economic uncertainty, inflation and war & terror.
• Business – including supply chain instability, business interruption, boardroom risk, crime, reputational and employer risk and failure to comply with ESG regulations and reporting requirements.
• Environmental – including climate change and associated catastrophic risks, environmental damage, greenhouse gas emission, pandemic, food insecurity and energy transition risk.

Of the firms surveyed, there was an equal split of respondents across company sizes of:

• US$250,000 – US$999,999,
• US$1m – US$9.99m,
• US$10m – US$99.99m,
• US$100m- US$999.99m, and
• US$1 billion plus.

With a minimum of 50 respondents per country per industry sector, respondents represented businesses operating in:

• Healthcare & Life Sciences
• Manufacturing, Retail, Wholesale and Food & Beverage
• Commercial Property, Real Estate and Construction
• Hospitality, Entertainment and Leisure (including Gaming)
• Financial Institutions and Professional Services
• Energy and Utilities (including Mining), Marine and Warehousing
• Public Sector and Education
• Tech, Media and Telecoms
• Transportation, Logistics, Cargo and Aviation

This year’s survey was undertaken between 05.01.24 and 15.01.24 with 3,500 respondents based in the UK, US, Canada, Singapore, France, Germany and Spain. In 2021 the survey was undertaken with 1,000 respondents based in the UK and US. In 2022 and 2023 the sample base was expanded to 2,000 respondents based in the UK, US, Canada and Singapore.

Cyber & Technology Risk & Resilience Statistics for Global respondents:

• 24% felt unprepared to deal with cyber risk (company failure to ensure data privacy or external criminal threat including ransomware or broader systemic threat generating severe business interruption)
• 26% ranked cyber risk as their top risk
• 24% plan to invest in improved cyber security
• 24% plan to explore insurance options that include risk and crisis management
• 68% agreed that AI will lead to jobs being replaced in my company
• 27% rank tech obsolescence risk as their top risk – (failure to keep pace with changing technology development and opportunities e.g. AI, IoT, automation and the failure to update systems)
• 25% plan to invest in AI to improve their firm’s resilience
• 69% agree that their organization has adequate protection in place to protect it against a cyber attack
• 75% feel prepared to deal with cyber risk
• 24% feel unprepared to deal with tech obsolescence risk

About Beazley

Beazley plc (BEZ.L) is the parent company of specialist insurance businesses with operations in Europe, United States, Canada, Latin America and Asia. Beazley manages seven Lloyd’s syndicates and, in 2023, underwrote gross premiums worldwide of $5,601.4 million. All Lloyd’s syndicates are rated ‘A’ by A.M. Best.

Beazley’s underwriters in the United States focus on writing a range of specialist insurance products. In the admitted market, coverage is provided by Beazley Insurance Company, Inc., an A.M. Best A rated carrier licensed in all 50 states. In the surplus lines market, coverage is provided by the Beazley syndicates at Lloyd’s.

Beazley’s European insurance company, Beazley Insurance dac, is regulated by the Central Bank of Ireland and is A rated by A.M. Best and A+ by Fitch.

Beazley is a market leader in many of its chosen lines, which include professional indemnity, cyber, property, marine, reinsurance, accident and life, and political risks and contingency business.

For more information, please visit www.beazley.com.

SOURCE: Beazley Group

Tags: Artificial Intelligence (AI), Beazley, cyber risk, survey