Cyber Defence and Cyber Insurance Are Not Mutually Exclusive

Cyber defence and cyber insurance play complementary roles in managing the threats posed by Cyber-attacks. It’s important to recognise the symbiotic relationship of cybersecurity and cyber insurance. They are not mutually exclusive and should be allied as part of an integrated security risk management strategy. 

Here’s a deeper breakdown of how they complement each other:

1. Pre Event v’s Post Event

• Cyber Defences: Pre Event - Cyber-attacks are inevitable, you need to be prepared to combat them.
  At a simple level Cyber defence looks at Protection, Detection and Response – seeking to Prevent serious impact to business operations, reputation, and revenue. This includes everything from firewalls and intrusion detection systems to employee training and vulnerability assessments. These tools and practices try to block, detect, and respond to a threat before an attacker can achieve success.

• Cyber Insurance: Post Event – If a cyber-attack is successful, despite the defensive controls, it can be expensive to manage and rectify. Finance and other forms of support e.g. technical investigation, media management are required 
  Cyber Insurance provides the surety, that resource can be called upon during a crisis event.  This is more of a post event measure. It doesn't stop a cyber-attack from happening, but it provides experienced and structured support during and after the crisis. It covers recovery expenses, legal costs, and even reputational damage that might occur after an incident like a data breach or ransomware attack.

2. Financial Commitment

• Cyber Defences: Cyber Defence delivers current and ongoing risk management of threats, requiring continual investment in software, tools, and expertise. It also requires ongoing maintenance—patching systems, updating firewalls, and making sure defences stay ahead of new attack methods.
• Cyber Insurance: In contrast, cyber insurance is the back stop of the risk management framework. If all else fails, there is a support mechanism that can be called upon. It's essentially a safety net that activates once something goes wrong, whereas cyber defences act as the guardrails to manage threats and their potential impact. 

3. Time to Implement

• Cyber Defences: As mentioned, defensive measures can take time to implement, especially in large, complex systems. It requires ongoing testing, auditing, and adaptation to new threat landscapes. Plus, it’s important to have people monitoring systems 24/7 for breaches and anomalies.
• Cyber Insurance: Cyber insurance is relatively quick to acquire and, once you’ve decided on the coverage terms, can be used to manage the risk of a successful attack whilst defences are put in place. The terms may take some negotiation, but once the insurance company has underwritten the policy, you’re covered for the agreed-upon events.

4. Coverage and Risk Management

• Cyber Defences: The goal is to significantly lower the risk of an incident impacting the business by improving security capabilities, reducing known vulnerabilities and hardening systems. This is a proactive measure aimed at lowering the probability of an attacker being successful and making the organisation a less attractive target.
• Cyber Insurance: Even with the best defences, cyber-attacks can still happen (like zero-day vulnerabilities or sophisticated attacks). Insurance covers the financial fallout when all preventative measures fail. It doesn’t prevent the attack itself but compensates for the damages that result.

5. Incident Response and Recovery

• Cyber Defences: If a breach does occur, cyber defences might offer limited response capabilities like identifying and containing the threat, but they don’t offer financial support or expert consultations during a crisis.
• Cyber Insurance: This is where cyber insurance really comes into play. Insurance policies often include incident response teams who help coordinate the recovery effort. They may bring in experts like forensic investigators, lawyers, or PR professionals to manage the situation and help the company recover faster. The financial aspect of the response is covered too—whether it’s covering legal liabilities, paying for damage control, or even compensating customers affected by the breach.

6. Maintenance and Updates

• Cyber Defences: Cyber defences need constant updating and fine-tuning, especially as new vulnerabilities are discovered and attack techniques evolve. It's an ongoing process of testing and monitoring to stay ahead of the curve.
• Cyber Insurance: The maintenance for insurance is much simpler, revolving around policy renewals and ensuring the policy coverage is in line with the current risk environment. If the business undergoes major changes (e.g., new technology, expanded operations), the insurance policy might need to be updated to ensure continued coverage.

7. Cost Recovery

• Cyber Defences: Preventative defences don’t directly lead to financial recovery. They may prevent losses in the first place, but they don’t directly compensate for them if a breach occurs.
• Cyber Insurance: Cyber insurance is where you recover the financial losses. After an incident, insurance can cover things like lost revenue during downtime, fines or penalties resulting from regulatory breaches, and costs of legal defence or customer notification. This can be an important factor in maintaining shareholder and stakeholder confidence.

The Holistic Risk Management Approach

Think of cyber defence as the frontline protection against attacks, and cyber insurance as usually the backup plan to help recover and manage the financial risks if the defences fail. Both are essential parts of a business’s overall risk management strategy:

• Defences: Minimise the risk of incidents happening.
• Insurance: Mitigates the financial consequences if something does happen.

Without one or the other, you leave yourself vulnerable—either to attacks (without defences) or to devastating costs (without insurance).

More and more insurers are realising that cybersecurity isn't just a one-time risk to be assessed during underwriting; it's an ongoing threat that requires constant attention. Embedding cyber risk management throughout the policy lifecycle—starting from pre-policy to claims—is definitely the future of cyber insurance, and where leading insurers are showing the way forwards.

The proactive approach is becoming increasingly crucial because cyber threats evolve so rapidly. Insurers are moving toward offering not just coverage, but also real-time risk mitigation and ongoing a level of support to help businesses reduce exposure to emerging cyber risks. Some are even leveraging tools like threat intelligence and offering services such as vulnerability scanning or employee training as part of their policy packages.

Do you think this shift will change how businesses approach cybersecurity overall? Or will it just make cyber insurance more of a compliance check rather than an active risk management tool?