Cyber insurance is an increasingly critical part of an organization's approach to cyber defense and CISOs have realized that identity management and, in particular, Privileged Access Management (PAM) are some of the most important and influential aspects of any organization’s overall cybersecurity strategy. These disciplines involve the processes and technologies used to manage the digital identities of individuals and systems that interact with an organization's systems, applications and data. By implementing good identity management and Privileged Access Management practices, organizations can lower their cyber insurance premiums and raise insurance limits, whilst providing a multitude of benefits for their business.
Identity & Access Management (IAM) has recently been identified as having particular interest to cyber insurance providers. The reason for this, at its core, is simple: When implemented properly, IAM, PAM, Access Management, two-factor authentication and related technologies can significantly reduce the risk of data breaches. Use of stolen or compromised credentials remains the most common cause of data breaches, accounting for 19% of the attack cases. Data breaches can result in some of the most significant financial losses faced by businesses and insurers alike, and insurance companies are very aware of this based on experiences of the past 10 years. Put simply, organizations with strong IAM systems are less likely to experience data breaches, and thus pose less of a financial risk to an insurance company. Indeed, policy questionnaires (sometime referred to as “Ransomware Questionnaires”) authored by cyber insurance firms to collect data and better understand their potential clients’ risk posture now show a heavy focus on the domain of identity management and the topic of how privileged users are governed.
A recent survey among insurance underwriters paints a grim picture. 59% of respondents believe companies should focus on strengthening their cybersecurity as the number one risk mitigation strategy, while 41% believe companies should also focus on improved processes and procedures. Insurance companies are also clear about risk awareness: 65% say companies should be more aware of cyber risks they face. These trends are manifesting in the pricing trends: after the explosive growth of cyber insurance policies in 2022 (which peaked around 140%), premiums are still rising, albeit at a more modest, 49% increase over expiring insurance.
Good implementation of these disciplines also helps to improve an organization's overall security posture. Digital identity lays at the core of good security in that the people, devices and systems that access sensitive and privileged data are most often the target of cybercriminals. By implementing robust IAM processes and technologies, organizations can ensure that only authorized individuals have access to sensitive information and systems, and that all access is properly monitored and controlled. This helps prevent unauthorized access and reduces the risk of cyberattacks, which again, can result in lowered risk posture and more attractive clients as far as the cyber insurer is concerned.
In the event of a data breach or cyberattack, good identity management can also help improve incident response and recovery. By having robust IAM systems in place, organizations can quickly and accurately determine the source of the security threat and respond appropriately. This is seen as a huge reduction in financial exposure by insurers since a high proportion of cyber insurance payouts are assigned to the forensic investigation, legal activity and business recovery processes associated with a breach.
Additionally, an investment in IAM has been seen to help to improve employee productivity and lower the risks associated with human error. By automating many of the manual processes involved in identity management and Privileged Access Management, organizations can save time and reduce the risk of incorrect or misaligned system privilege. Additionally, by having better visibility and control over who has access to sensitive information and systems, organizations can severely restrict the identity-based attack surfaces that are so attractive to criminals.
In conclusion, good identity management and Privileged Access Management are critical components of any organization's overall security strategy. By implementing frameworks such as Zero Trust and related technologies, organizations can reduce the risk of data breaches, improve their overall security posture, comply with regulations, provide better visibility and control, improve incident response and recovery and improve employee productivity. These benefits come with the additional bonus that organizations can also lower their cyber insurance premiums and raise insurance limits, further helping to make their business more resilient to cyber catastrophe. Organizations that implement good identity management systems demonstrate to their insurance provider that they have taken steps to secure their systems and data. In an insurance market deemed “hard” due to massive losses in recent years, this should be of interest to all business leaders.
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One Identity specializes in many of the tools and best practices discussed in this article. For further information, please refer to the following web resources:
Identity Governance & Administration
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