Cyber Risk Insurance: Building Resilience in Wales

The Challenge

Cyber risk, namely the risk of cyber attack and data fraud/theft, has been identified as one of the risks of highest concern to commercial entities around the world. A defining characteristic of cyber risks is that they are not constrained by geographic boundaries, making it less likely that perpetrators will be identified and more likely that sophisticated protective measures are required.

It is undeniable that cyber risks pose a greater risk to small and medium sized (SME) business given that they might not have the know-how and means to protect themselves against such risks. In this context, cyber risk insurance can be utilised as a risk management tool by SMEs but cyber risks insurance is a relatively new product, and there is evidence to suggest that SMEs either do not purchase adequate cyber cover to protect their business interests or the types of insurance cover purchased do not provide adequate cover.

The purpose of this project, led by Prof Baris Soyer and Dr George Leloudas, (funded by Research Wales Innovation Fund) is to test the accuracy of this hypothesis through interviews with SMEs across Wales. The ultimate aim of this study is to produce guidelines for SMEs as to how they could maximise the cyber cover that they can obtain from the market and thus utilise cyber risk insurance as an effective risk management tool against cyber risks. 

The Method

We are in the process of appointing a research assistant for the project. The main job of this person will be to engage with SMEs in different parts of Wales with interviews (qualitative research) so that we can have a good understanding of what kind of insurance provision most SMEs have in place against cyber risks. The project leaders have a vast knowledge of the cyber risk insurance products on offer in the insurance market so the next stage of the study will be to identify which products would be most suitable for SMEs operating in different fields. It is envisaged that the findings of the project will be shared with SMEs in Wales, business community in general and the Welsh Government.

The Impact

The research will certainly provide valuable information to SMEs in Wales as to how they can best use cyber risk insurance to protect their businesses. It is envisaged that this information will also be useful for businesses in other part of the United Kingdom.  We intend to share our findings with insurers in the hope that understanding the concerns and needs of SMEs will encourage them to amend the cyber insurance products currently on offer.      .

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