The Federal Financial Institutions Examination Council member agencies issued a joint statement April 10 to describe matters that financial institutions should consider if they are determining whether to use cyber insurance as a component of their risk management programs.
The agencies’ announcement does not require financial institutions to maintain cyber coverage.
“The evolving cyber insurance market and the shifting cyber threat landscape may, however, prompt financial institutions to consider whether cyber insurance would be an effective part of their overall risk management programs,” according to the Exam Council announcement.
The joint statement notes that cyber attacks are increasing in volume and sophistication and that traditional general liability insurance policies may not provide effective coverage for all potential exposures caused by cyber events. Cyber insurance could offset financial losses from a variety of exposures—including data breaches resulting in the loss of confidential information—that may not be covered by more traditional insurance policies.
The council advises that institution management should assess the scope of coverage of current insurance and consider how cyber insurance may fit into the institution’s overall risk management framework.
“As with any insurance coverage, cyber insurance does not diminish the importance of a sound control environment,” the announcement stated. “Rather, cyber insurance may be a component of a broader risk management strategy that includes identifying, measuring, mitigating, and monitoring cyber risk exposure.”