Cyber Insurance - Is a must have - you will need it

Cyber Insurance - Is a must have - you will need it.

It’s every healthcare organization’s nightmare to get the call that their data has been breached or hacked. As a result, many have turned to cyber insurance to protect assets and business operations.

As cyber policies and carriers lack a universal policy, there’s an even greater worst case scenario: An organization is breached, and the policy doesn’t cover what the leaders thought it did. Now, not only is the healthcare provider strapped with the burden of the breach, it wasted money on a useless cyber insurance policy.

To get a better grasp on how to choose the right policy, Healthcare IT News asked attorney Matthew Fisher, partner with Mirick O’Connell, and Jane Harper, Henry Ford Health System’s director of privacy and security risk management, to outline the biggest policy mistakes -- and how to avoid them.

Mistake #1: Rushing the process

When buying a policy, a carrier will provide a questionnaire that will evaluate your organization’s security posture, program, tools and policies. The biggest mistake is to rush the pre-policy process to see the rates and what the carrier will cover, explained Fisher.

Organizations need to be conservative with how they answer the questions, as “it could be a ground for denial, if you don’t have the policies you said you have in place,” said Fisher. “You have to make sure you’re not unintentionally misleading the insurance company when it comes to coverage.”

Often these questionnaires attempt to create a black and white policy and “it can be tough to answer correctly,” explained Fisher.

“Your ability to be as transparent and truthful upfront is critical to the nonpayment discussion,” said Harper. “If you tell the insurance company that you have everything in place and are compliant, if you tell them that and then you have an issue, and you weren’t truthful, it ends up being a legal battle.”

“When you submit your checklist that they have you fill out, meet with the underwriter to make sure you understand what you’ve documented,” she added. “You also need the copy that was provided to the insurance company because it will come back into play when you submit the final documents.”

For example, if you say you have a specific control in place, and you actually don’t, Harper explained that can create a situation where “they thought they had an understanding of something, but they didn’t.”

“Be honest, transparent and accurate -- because they can deny your policy if you were inaccurate or misleading in your responses,” she said.

Mistake #2: Lax, incomplete risk assessment

It’s easier to prevent a misleading or false statement to an underwriter, when an organization has a strong assessment and inventory of the processes and tools on the system. But far too often, hospitals “don’t know everything about the control environment,” explained Harper.

“When you talk about protecting an system and preventing a cyber incident, you have to have a good understanding of the organization’s overall control environment,” Harper said. “It’s key, as the longer it takes you to identify that you’ve had an incident, it leads to more exposure and the longer it takes to recover.”

But it’s also important to remember to update this inventory or assessment when buying new tools, merging with other organizations, hiring new staff and the like, Harper explained.

“Think about all of the activities and operations that happen,” she said. “And every three years, you’re updating a cybersecurity checklist -- that may not be frequent enough.”

For example, Harper explained that an organization filling out the policy questionnaire may have all of the right elements in place. But if another tool was purchased and the controls weren’t updated or the control was removed and the underwriter was not notified, there could be a problem.

“If those controls played into how the underwriter rated you: that can be key,” said Harper. “Think about your own home: you get additional discounts when you have a burglar alarm. So if you get one, and let them know, you may get a lower rate…  But if you no longer have that control, you have to tell the carrier.”

“It’s the same kind of practice that we want to get into when we get into cyber insurance for our organization,” she added.

Mistake #3: Failing to involve the right people

Many organizations understand that security needs to exist outside of the IT team. In the same vein, it’s crucial when buying a cyber insurance policy that the same mentality is applied to make sure all of your bases are covered.

“Make sure you are talking to the right individuals,” Harper said. “The appropriate key stakeholders are not only involved with the evaluation process - how many patients, how much data, etc. -- but also the responses to the questions the policy is going to ask.”

“Risk folks typically talk about it as it relates to patients,” she continued. “Those folks are key, but in addition, you need your privacy and security risk professionals, security officers, IT leader, your key business leaders/owners and those driving the data. It’s key.”

Also crucial? Making sure the facilities team is involved, as there can sometimes be a cyber incident based on a physical issue. Harper explained that “often people tend to focus on things like electronic PHI, but there’s physical PHI. If there’s a break in at a warehouse and data is stolen, OCR considers that a breach.”

Mistake #4: Failing to understand coverage

Far too often organizations make large assumptions as to just what cyber insurance will cover. Fisher explained that these leaders are often shocked to learn that they did not receive the full spectrum of coverage they wanted.

“Relying on blind faith on those terms, or what the broker or agent is telling you is a major mistake,” said Fisher. “It’s always up to up to you to go into something with eyes fully wide open to make sure you know what you’re actually buying.”

Harper took it a step further and laid to rest a common misconception when it comes to coverage: “Insurance will not cover fines and penalties associated with noncompliance. If you’re not complaint, and you didn’t do risk assessments, cyber insurance won’t protect you from that, so don’t expect it.”

Ransomware Business Impacts, Ransomware Business Cost

Projecting the overall cost of a ransomware attack can be tricky for security executives considering the many factors that can come into play when responding to and recovering from one. Information from numerous previous incidents show the costs go well beyond any demanded ransom amount and the costs associated with cleaning infected systems.

Ransomware is defined as a form of malicious software that is designed to restrict users from accessing their computers or files stored on computers till they pay a ransom to cybercriminals. Ransomware typically operates via the crypto virology mechanism, using symmetric as well as asymmetric encryption to prevent users from performing managed file transfer or accessing particular files or directories. Cybercriminals use ransomware to lock files from being used assuming that those files have extremely crucial information stored in them and the users are compelled to pay the ransom in order to regain access.

Ransomware History

It’s been said that Ransomware was introduced as an AIDS Trojan in 1989 when Harvard-educated biologist Joseph L. Popp sent 20,000 compromised diskettes named “AIDS Information – Introductory Diskettes” to attendees of the internal AIDS conference organized by the World Health Organization. The Trojan worked by encrypting the file names on the customers’ computer and hiding directories. The victims were asked to pay $189 to PC Cyborg Corp. at a mailbox in Panama.

From 2006 and on, cybercriminals have become more active and started using asymmetric RSA encryption. They launched the Archiveus Trojan that encrypted the files of the My Documents directory. Victims were promised access to the 30-digit password only if they decided to purchase from an online pharmacy.

After 2012, ransomware started spreading worldwide, infecting systems and transforming into more sophisticated forms to promote easier attack delivery as the years rolled by. In Q3, about 60,000 new ransomware was discovered, which doubled to over 200,000 in Q3 of 2012.

The first version of CryptoLocker appeared in September 2013 and the first copycat software called Locker was introduced in December of that year.

Ransomware has been creatively defined by the U.S. Department of Justice as a new model of cybercrime with a potential to cause impacts on a global scale. Stats indicate that the use of ransomware is on a steady rise and according to Veeam, businesses had to pay $11.7 on average in 2017 due to ransomware attacks. Alarmingly, the annual ransomware-induced costs, including the ransom and the damages caused by ransomware attacks, are most likely to shoot beyond $11.5 billion by 2019.

Ransomware Business Impacts Can Be Worrisome

Ransomware can cause tremendous impacts that can disrupt business operations and lead to data loss. The impacts of ransomware attacks include:

• Loss or destruction of crucial information

• Business downtime

• Productivity loss

• Business disruption in the post-attack period

• Damage of hostage systems, data, and files

• Loss of reputation of the victimized company

You will be surprised to know that apart from the ransom, the cost of downtime due to restricted system access can bring major consequences. As a matter of fact, losses due to downtime may cost tens of thousands of dollars daily.

As ransomware continues to become more and more widespread, companies will need to revise their annual cybersecurity goals and focus on the appropriate implementation of ransomware resilience and recovery plans and commit adequate funds for cybersecurity resources in their IT budgets.

Consider the following examples. The Erie County Medical Center (ECMC) in Buffalo, NY, last July estimated it spent $10 million responding to an attack involving a $30,000 ransom demand. About half the amount went toward IT services, software, and other recovery-related costs. The other half stemmed from staff overtime, costs related to lost revenues, and other indirect costs. ECMC officials estimated the medical center would need to spend hundreds of thousands of dollars more on upgrading technology and employee awareness training.

Public records show that the City of Atlanta spent almost $5 million just in procuring emergency IT services following a March 2018 ransomware attack that crippled essential city services for days. The costs included those associated with third-party incident response services, crisis communication, augmenting support staff and subject matter expert consulting services.

In Colorado, Gov. John Hickenlooper had to set aside $2 million from the state disaster emergency fund after ransomware infected some 2,000 Windows systems at CDOT, the state department of transportation, this February. In less than eight weeks, CDOT officials spent more than half that amount just returning systems to normal from the attack.

Not surprisingly, industry estimates relating to ransomware damages have soared recently. Cybersecurity Ventures, which pegged ransomware costs at $325 million in 2015, last year estimated damages at $5 billion in 2017 and predicted it would exceed $11.5 billion in 2019.

For security executives trying to prepare a total ransomware cost estimate, the key is not to get fixated on the ransom amount itself. Even if you end up paying it to recover your data—something that most security analysts advocate against—the actual costs of the attack in most cases will end up being greater.