Compared to last year, more than twice as many startup founders reported talking to their investors and boards about cyber protection often or always, according to a new Embroker cyber risk index. That number reached 83% in 2023, a 42% increase year-over-year.
Embroker’s index survey found that 90% of startup founders reported having cyber insurance. Just 16% of the 500 V.C.-backed respondents said they didn’t believe cyber coverage is necessary (down from 32% in 2022), and 85% of founders are considering new cyber protections or tools for 2024.
“Investors saw the new SEC ruling in July and decided that they have to up their cyber ante, public company or not,” said David Derigiotis, chief insurance officer at Embroker. “Boards and investors are prioritizing cybersecurity by looking to invest in startups with robust cyber protections in place. And the founders are feeling the pressure.”
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The Embroker report found “malicious artificial intelligence” tied with “attacks against key suppliers and partners” as the leading cybersecurity threats to businesses. Nine of 10 founders view malicious AI as a threat. Nevertheless, if their companies were to be subjected to malicious AI, 76% of respondents said they have the means in place to combat or recover from it.
Derigiotis said founders are realizing that cyber insurance does much more than just cover financial losses. They’re understanding that “it helps them by providing additional resources when responding to a security incident, eases their ability to secure funding and offers a variety of services that can help them comply with new federal or state regulations.”
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He later added that confidence in cyber insurance coverage increased significantly from last year, with more than half of founders believing cyber insurance would cover them in the event of a breach. Derigiotis pointed to this as evidence that the insurance industry is giving buyers greater clarity around covered — or uncovered — loss scenarios and evolving to meet a growing need.
“Cybersecurity is becoming a greater priority for organizations,” Derigiotis said. “In fact, cyber protection ranked as the leading non-negotiable investment for businesses in the coming year. Right now, it’s pivotal for brokers and agents to broaden their knowledge and expertise in cyber insurance, emerging threats and the changing regulatory landscape to ensure their clients receive the right policies.”
Topics Cyber
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