A sharp increase in the number and cost of cyber attacks is the key finding in a study of more than 5,400 organisations across seven countries, commissioned by insurer Hiscox.
More than three out of five firms (61 per cent) report one or more attacks in the past year, yet the proportion achieving top scores for their cyber security readiness is marginally down year-on-year.
The Hiscox Cyber Readiness Report 2019 surveyed a representative sample of private and public sector organisations in the US, UK, Belgium, France, Germany, Spain and the Netherlands.
Each firm was assessed on its cyber security strategy and execution, and ranked accordingly. Only 10 per cent achieved high enough marks in both areas to qualify as cyber security ‘experts.’
Among the key findings:
- Cyber attacks reach a new intensity:More than three in every five firms (61 per cent) experienced a cyber incident in the past year, up from 45 per cent in the 2018 report. The frequency of attacks also increased. Belgian firms were the most heavily targeted.
- More small and medium-sized firms attacked this year:While larger firms are still the most likely to suffer a cyber attack, the proportion of small firms (defined as those with less than 50 employees) reporting an incident is up from 33 per cent to 47 per cent. Among medium-sized firms (50 to 249 employees) the proportion has leapt from 36 per cent to 63per cent.
- Cyber losses soar:Among firms reporting attacks, average losses associated with all cyber incidents have risen from $229,000 last year to $369,000 – an increase of 61 per cent. For large firms with between 250 and 999 employees cyber-related losses now top $700,000 on average compared with $162,000 a year ago. German firms suffered the most, with one reporting a cost for all incidents of $48 million.
- More firms fail cyber readiness test:Using a quantitative model to assess firms for their cyber readiness, only one in ten (10 per cent) achieved ‘expert’ status this year, slightly down from 11 per cent in 2018. Nearly three-quarters (74 per cent) ranked as unprepared ‘novices’. There was a sharp drop in the number of larger US and German firms achieving ‘expert’ scores.
- Cyber security spending up by a quarter:The average spend on cyber security is now $1.45 million, up 24 per cent on 2018, and the pace of spending is accelerating. The total spend by the 5,400 firms in the survey comes to $7.9 billion. Two-thirds of respondents (67 per cent) plan to increase their cyber security budgets by 5% or more in the year ahead.
Gareth Wharton, Hiscox Cyber CEO, said: “This is the third Hiscox Cyber Readiness Report and, for the first time, a significant majority of firms report one or more cyber attacks in the past 12 months. Where hackers formerly focused on larger companies, small and medium-sized firms now look equally vulnerable.
“The cyber threat has become the unavoidable cost of doing business today.
“The one positive is that we see more firms taking a structured approach to the problem, with a defined role for managing cyber strategy and an increased readiness to transfer the risk to an insurer by way of a standalone cyber insurance policy.”
The study also shows:
- Wide disparity in readiness scores: Overall, US, German and Belgian firms score highest on the cyber readiness model, while more than four-fifths of French firms (81 per cent) are in the ‘novice’ category. Along with the Netherlands, France has the smallest proportion of large and enterprise firms that rank as ‘experts’, at 9per cent.
- Cost figures skewed by large incidents: Among firms that were targeted by hackers, there has been a sharp rise in the cost of the biggest single incident reported in the past year. The mean cost has jumped from $34,000 to a fraction under $200,000.
- Supply chain incidents now commonplace: Nearly two-thirds of firms (65 per cent) have experienced cyber-related issues in their supply chain in the past year. Worst affected are technology, media and telecoms (TMT) and transport firms. The majority of firms (54 per cent) now evaluate the security of their supply chains at least once a quarter or on an ad hoc basis.
- Reasons to be optimistic: The proportion of firms with no defined role for cyber security has halved in the past year – from 32 per cent to 16 per cent – and there has been a marked fall in the number of respondents saying they changed nothing following a cyber incident (from 47 per cent to 32 per cent). New regulation has also prompted action, with 84 per cent of Continental European firms saying they have made changes following the advent of the General Data Protection Regulation (GDPR). The figure for UK firms is 80 per cent.
- Rising uptake of cyber insurance: More than two out of five firms (41 per cent) say they have taken out cyber cover in the past year (up from 33 per cent in 2018). A further 30 per cent plan to but only 27 per cent of small firms.
The full report can be accessed here: https://www.hiscox.co.uk/cyberreadiness