How Cyber Risk Is Redefining Business Insurance

Spiros Fatouros, CEO of Marsh Africa, dives into one of the most pressing challenges facing businesses today: cyber risk. Drawing on key findings from the Marsh McLennan and Zurich report, Spiros reveals that 99% of the economic loss caused by cyber incidents is currently uninsured, creating a massive protection gap. As cyber threats—ranging from ransomware attacks to cloud vulnerabilities—become more frequent and severe, businesses must rethink their approach to risk management.

Spiros explains how cyber risks affect businesses of all sizes, noting that small and medium enterprises are often underinsured or not insured at all, despite facing substantial exposure. He discusses the growing interest in cyber insurance in South Africa, where companies are increasingly recognising the need for protection as cyber risk becomes a board-level concern. With cyberattacks now considered a permanent risk, Spiros highlights the importance of adopting a holistic approach to risk management—combining IT controls, governance, and insurance coverage.

Looking ahead, Spiros calls for stronger public-private partnerships to address systemic cyber risks, comparing the situation to past initiatives like nuclear or natural disaster pools. He advocates for governments and industries to collaborate on frameworks for sharing data and developing scalable solutions to mitigate these massive, evolving risks.

Whether you’re a business owner, risk manager, or simply interested in the future of cyber insurance, this episode offers valuable insights into how companies can protect themselves in an increasingly digital world.

Key Points:

1. Cyber Risk and Economic Loss: Spiros highlights the finding that 99% of economic losses from cyber incidents remain uninsured, emphasising the growing risk businesses face.

2. Challenges for Small and Medium Enterprises: Many small and medium-sized businesses are underinsured or uninsured, often not recognising the cyber threats they face, despite their reliance on digital systems.

3. Rising Interest in Cyber Insurance: Spiros notes that there has been a significant increase in the purchase of cyber insurance in South Africa, as businesses increasingly view cyber risk as a board-level issue.

4. Public-Private Partnerships: Spiros advocates for the development of public-private partnerships to address large-scale systemic cyber risks, comparing the potential need for such initiatives to existing frameworks like Sasria.

5. Evolution of Insurance Products: Spiros discusses the need for cyber insurance products to evolve quickly to keep pace with the rapidly changing threat landscape, acknowledging that insurers may lag behind new cyber threats.