Read it and weep. With statistics like these, it's a wonder any executives can sleep at night. And if organizations aren't eligible for cyber insurance, they're at significant risk of a financially devastating cybersecurity breach.

Any firm using technologies and IT infrastructure must invest in cybersecurity insurance due to the rising danger posed by cybercriminals. Regrettably, increasing cyberattacks make it extremely difficult for insurance companies to accept new clients or validate claims from current ones.

Furthermore, because of the lengthy application and renewal processes, businesses frequently encounter rejection when obtaining cyber insurance.

But, while insurance protocols might seem to run the show, companies can have an insurance safety net with Cloud ERP technology.

First, let's take a look at reasons why you might be ineligible for insurance coverage. Then we'll discuss how Cloud ERP can be your sentinel for data protection.

What does cyber insurance entail?

To help reduce the financial risks connected to online enterprises or businesses that use technology, an entity or business might enter into a contract for cyber insurance. The policyholder pays a monthly or quarterly cost while the insurer bears the risk.

The cyber insurance market increased from US$ 9.73 billion in 2021 to approximately US$ 11.75 billion in 2022.

It demonstrated a compound annual growth rate (CAGR) of 20.7% for the previous two years. Yet, for various reasons, cyber insurance firms are hesitant to accept insurance offers from businesses or to accept claims.

Reasons why your business might be ineligible for cyber insurance

Companies can be denied cyber insurance coverage for several reasons. Typical explanations include the following:

Inability to provide evidence of suitable security measures

Insurance firms may consider businesses at high risk if they cannot demonstrate their security robustness while adhering to stringent legislation, security policies, best practices, and robust benchmarks. Allowing insurance companies to evaluate all preventive measures and evaluate security based on numerous indicators is the best approach to handle this.

Absence of protective measures

Another frequent justification for denying firms cyber insurance is a lack of preventative steps or best practices for cybersecurity. Because cybersecurity is such a problematic IT endeavor, companies cannot guarantee security. However, many businesses neglect to conduct regular audits, compliance checks, or penetration tests as part of their cybersecurity procedures.

That's the primary justification cyber insurance providers give for rejecting claims or applications, as the absence of preventative steps shows the business could not protect its systems.

Cyber insurance companies decline to bear risk since the risks of doing business with such enterprises vastly outweigh the benefits. Thus, businesses should proactively secure their perimeter before filing a claim or purchasing cyber insurance. It is a step in the right direction to hire penetration testers and security audit experts to examine the entire system and address any flaws.

History of data breaches

Insurance companies may see a corporation as a higher risk and refuse coverage or increase premiums if they have previously had a data breach. Insurance companies might be reluctant to offer coverage owing to the possibility of future breaches, even if there is a resolution to the problems that caused a breach.

In addition, insurers may perceive a corporation as too high of a risk to cover if a past breach resulted from a lack of security measures, such as insufficient firewalls or unpatched software.

When businesses show that their cybersecurity procedures have improved, they can reduce the risk of future breaches and raise their chances of receiving cyber insurance.

Failure to follow regulations

Companies are more likely to be denied coverage if they don't follow cybersecurity laws and regulations. For instance, a healthcare provider not adhering to HIPAA rules might not be approved for cyber insurance.

Companies must comply with the PCI DSS, SOC2, FedRAMP, ISO27001, and MPA compliance standards to be eligible for coverage. Insurance companies could see non-compliance as a higher risk of cyberattacks and other incidents, such as data breaches.

Absence of a plan for handling incidents

If an insurance carrier discovers that a business does not have an incident response plan, it may refuse coverage. That's because the absence of an incident response strategy shows that the company is not taking the necessary precautions to react appropriately during a cyber incident.

Industries at high risk

Healthcare and banking are two sectors more vulnerable to cyberattacks and may experience higher premiums or coverage denial rates. Insurers view these sectors as being particularly exposed to numerous risks and having a lot of sensitive data that could be compromised. Businesses should take the required steps to reduce risk and show insurers this.

Companies must comprehend cyber insurance policies and the justifications for coverage denials. Businesses can increase their likelihood of receiving coverage by improving areas where they are not meeting their insurer's requirements.

Now for the excellent news – Cloud ERP

Cloud ERP is rapidly becoming the choice of executives for data protection and more.

Why? Because much of an organization's most sensitive and vital data resides in ERP systems. Enterprise-wide concerns about data security have risen, and business executives are increasingly assisting in strengthening cybersecurity and spotting risks.

Executives must know where this information is kept, how it is protected, any potential hazards, and how to manage those risks.

ERP Security in the Cloud vs. On-Premises

Understanding the shared responsibility concept for security is crucial when switching from on-premises to cloud ERP. Security for cloud-based ERP systems is everyone's responsibility, not just that of the vendor.

Advantages of Cloud ERP Security Reduced Expenses

Because the cloud provider controls security, controlling security costs is significantly more affordable with cloud ERP. Systems for identifying and responding to security threats will be in place at the cloud provider, ensuring that any potential hazards are handled immediately following established protocols.

Customers benefit since the security expenses in the cloud ERP subscription prices minimize their security obligations. That gives IT staff more time to concentrate on other potential weak spots like application-level security and user access.

Here are some of the ways that cloud ERP can protect your organization's data:

Auto-Updated Software

One of the primary motives for using cloud ERP solutions is to avoid having to request approval from management before implementing changes. Any delays in updating your ERP could expose it to hazards associated with cloud ERP, such as hacker attacks. The cost of the cloud subscription includes automatic upgrades, guaranteeing current operation, and addressing Cloud ERP security issues.

Attempted Denial-of-Service

The ability to handle denial-of-service (DoS) attacks is a significant benefit of cloud ERP. When attackers flood the system with unnecessary requests to overwhelm it and prevent legitimate requests from being fulfilled, they commit a denial-of-service (DoS) attack. Cloud ERP systems are more protected from DoS assaults since they operate on scattered data centers worldwide. Moreover, cloud service providers have specialized teams to quickly and effectively respond to DoS attacks. While limited-service outages can happen, they are much less common than with on-premises ERP systems.

Compliance and encryption

Your systems and data are secure since cloud ERP providers offer encryption for data both in transit and at rest. Cloud ERP security technologies use HTTPS for internet traffic, SDKs for application-level encryption, and default settings for data storage encryption. Furthermore, cloud ERP solutions offer pre-built templates to save time and effort, making it simpler to comply with security compliance needs. Companies may maintain compliance in a few clicks, saving considerable installation time and work to support effective accountability, encourage financial scrutiny, and make risk-aware decisions.

Automatic software updates

ERP service providers fix threats or vulnerabilities by releasing security patches or software updates. Therefore, it is crucial to keep software updated to protect ERP data from any dangers. Software updates for on-premises ERP software were formerly infrequent since customers were discouraged from implementing the upgrade due to high project costs, complex architecture, extensive customizations, and significant downtime. Although clients have the option to enable security updates instantly, cloud ERP providers frequently release security upgrades that address the most recent threats and vulnerabilities. This is one of the primary benefits of cloud ERP systems and a significant factor in the rapid expansion of cloud ERP adoption.

Ability to assess the capacity for disaster recovery

If you encounter a disaster, Cloud ERP's Disaster Recovery (DR) services are designed to enable service restoration. To execute the DR strategy for the affected applications, your cloud ERP provider will decide if an occurrence qualifies as a catastrophe. Recovery Time Objective (RTO): The amount of time an application can be unavailable without seriously harming the company's operations is referred to as recovery time objective (RTO). The RTO is extended to consider the time needed to finish the upgrade if the decision to activate DR processes is made while an update is in progress. Restoration Point Goal: Your company's loss tolerance, or recovery point objective (RPO), is the maximum amount of data that can be lost without adversely impacting your operations. It is expressed as a time interval between the loss event and the most recent backup that came before it. The RPO does not cover any data loads in progress when the disaster happens. It's crucial to remember that the RTO and RPO do not cover adaptations that rely on external parts or third-party software. Non-critical fixes and enhancement requests are not supported while active failover events or recovery procedures are underway. Any problems brought on by third-party software or customizations are not the responsibility of your Cloud ERP provider. Production services may continue to function during the catastrophic event with reduced performance.

With Cloud ERP, you have the following benefits:

• complete control over selecting the right level of access for new users and the ability to revoke it when it is no longer necessary
• enterprise-wide centralized identity management and federated single sign-on means only users you have authorized have access to pertinent data, whether on-premises or across clouds (SSO)
• segregation of duties (SOD) is made possible by role-based access controls (RBAC), which prevent unauthorized access to sensitive data
• users only view information about the tasks particular to their jobs, and administrators configure job roles corresponding to work functions and data privileges.

Cloud ERP provides threat detection, remediation, and automated incident response:  your ultimate security shield.

Conclusion

Even with proactive precautions, many businesses are denied coverage as the cyber insurance landscape rapidly changes and evolves. But, to improve their chances of acquiring coverage, companies should assess their cybersecurity posture and ensure they adhere to relevant country or state laws and regulations.

Liberty Grove can help companies locate weaknesses in their security posture and provide the tools, services, and knowledge required to secure their networks. Taking preventive actions like running penetration tests and putting security solutions in place increases the likelihood of a successful cyber insurance application.

Contact Liberty Grove for a complimentary consultation on securing your access to cybersecurity insurance coverage.

Related reading:

Free Up IT Resources by Moving Your ERP to the Cloud (libertygrove.com)

Best 10 Reasons to Move Your On-Premises ERP to the Cloud - Liberty Grove Software

About the author

Liberty Grove Software is an established Microsoft Partner that focuses on providing customers with sales, service, and support for Microsoft Dynamics 365 Business Central/NAV solutions and training and upgrades.

Over more than 25 years, Liberty Grove has assisted hundreds of customers with businesses ranging from small to mid-sized to Microsoft Partners in implementing, training, customization, and upgrading Microsoft Dynamics ERP solutions.

The organization is one of only a few companies worldwide that Microsoft recognizes as qualified to provide Business Central/NAV Upgrade Service Centers.