The right questions are key: An analysis of cyber risk in small and medium-sized enterprises

Digitalisation of the economy and society provides many advantages. We live in a world where just about everyone carries a smart phone, orders products online and uses multimedia streaming services.

Under the banner of "Industry 4.0", companies are benefiting from the acceleration and enhanced efficiency promised by the digitalisation of operating processes. Meanwhile, functional PC workstations and fast internet connections have also become essential for the business activities of small and medium-sized enterprises (SMEs). However, increasing digitalisation and interconnectedness are also creating a high degree of dependency on functional and secure IT systems as well as the need for well-trained staff.
Small and medium-sized enterprises are more aware of cyber risks and their negative impact on regular business operations. This is in no small part driven by the introduction of data protection regulations in many countries, which in turn have led to SMEs taking an interest in analysing their IT risks, protecting themselves, and transferring part of their cyber risks to insurers.
The insurance industry has developed initial approaches and structured procedures for SME cyber risk analysis. The constantly changing threat situation, new experiences from handling cyber claims cases and technological progress will all have an impact on the further development of risk analysis methods. Cyber insurers should determine their insurance premiums based on the results of objective risk analyses and on the protective measures employed by policyholders. In this way, the insurance industry can play an important role in boosting the cyber maturity of an economy as whole and help to enhance the cyber resilience individual companies.

This article, The right questions are key - An analysis of cyber risk in small and medium-sized enterprises (see box at right), provides a better understanding about the evaluation of cyber risk in small and medium-sized enterprises.

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