Challenges of Cyber Security in Insurance Business

Greater use of information technology, electronic communication and digitization, exposes business entities to cyber threats and endangers their security. Cyber incidents, such as cyber-attacks, terrorism, cyber war, fraud, data theft are at the very top of the world’s risks. Any such incident can have bad and devastating consequences for business entities, therefore it is important to effectively manage cyber risks. The European Commission emphasized that member states should accelerate the strengthening of critical physical and cyber infrastructures in the face of these turbulent times. The systematic protection of the overall IT and information structure against cyber-attacks greatly contributes to cyber security. Insurance companies are by the nature of their business, a suitable target for cyber-attacks due to the possession of a significant amount of confidential data about policyholders. In order to automate operations, reduce costs, exchange information with clients faster and easier, insurance companies migrate more and more often to digital channels in order to create “sticky” relationships with customers and expand their business. The goal of cyber security is to reduce the risk of cyber-attacks and protection against unauthorized access and use of data, devices, networks and systems. In the near future all entities, including insurance companies will have to implement risk analysis and information system security policy, business continuity and crisis management, assessment of the effectiveness of risk management measures, and encryption and vulnerability detection. The main goal of this paper is to analyze risks arising from the digital way of doing business, regulations and provisions related to the implementation of plans to protect against attacks, and point out the possible threats to which the insurance sector is exposed. Also, the characteristics and significance of cyber insurance will be examined since risk transfer to insurance companies is one of the most important strategies in managing such risks.