One of the world's largest banking organizations just became a victim of fraud - again

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The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced that it has become a victim of fraud for the second time in 2016.

Hackers broke into SWIFT, a financial messaging system that more than 11,000 banks use to transfer money across borders, and stole money from one of the member banks by exploiting the connection between the banks and SWIFT's network.

The hackers accessed a bank's credentials and issued a fraudulent request for a fund transfer, then used malware to hide their movements within bank computers. SWIFT said the thieves were likely operating inside the system for months and could have used cyberattacks or human employees to supply them with the necessary insider information, according to the New York Times.

This latest attack on a Vietnamese commercial bank is likely tied to a similar attack that took place in Bangladesh in February in which hackers used similar methods to steal $81 million.

These two attacks demonstrate a significant threat to global financial security, especially considering the similarity of their executions. SWIFT even believes that these could be the precursors a more sophisticated attack on the broader banking system.

This means banks must increase their cybersecurity spending. According to the PNC's 2015 Global CEO survey, 79% of banking and capital markets CEOs pegged cyber attacks as the greatest threat, ahead of technological advancements and changing consumer habits.

The increased spending could make banking operations even more costly, but it could also make banks more receptive to alternative technologies such as the blockchain that could theoretically make transfers 100% safe.

Given this news, it's no surprise that companies are more worried than ever about the looming threat of hackers penetrating their networks. In the last year, the number of records exposed in data breaches rose 97%, according to the Identity Theft Resource Center.

The frequency and sophistication of cyber attacks are at an all-time high, and the costs associated with data breaches continue to rise. While companies are investing more in cybersecurity to ward off attacks, they know they won’t be able to spend their way to absolute security. A cybersecurity team of more than 1,000 staffers with a budget of $250 million wasn’t enough to save JPMorgan Chase from getting hacked in 2014. As a result, companies are turning to cyber insurance to help mitigate the costs of a potential breach.

However, insurers have been slow to extend cyber insurance to many businesses, as they have yet to develop proven tools to help them assess the risks and costs associated with cyber attacks. Cyber insurance policies also often have high premiums and low coverage limits to help protect insurers from incurring too much exposure to a cyber attack.

Jonathan Camhi, research analyst for BI Intelligence, has compiled a detailed report on cyber insurance that examines the growth of this market and identifies the key factors driving that growth. It also identifies the commercial sectors that are underserved in the cyber insurance market, which present a unique opportunity to insurers. Finally, it explains how insurers can find creative ways to cover these underserved markets while still limiting their overall exposure.

BII

Here are some key takeaways from the report:

• Cyber insurance plans cover a variety of costs related to cyber attacks, including revenue lost from downtime, notifying customers impacted by a data breach, and providing identity theft protection for such customers.
• Annual cyber insurance premiums will more than double over the next four years, growing from to ~$8 billion in 2020.
• However, many insurance companies have been hesitant to offer cyber insurance because of the high frequency of cyber attacks and their steep costs. For example, Target’s notorious data breach cost the company more than $260 million.
• Insurers also don’t have enough historical data about cyber attacks to help them fully understand their risks and exposures.
• There are large underserved markets with very low cyber insurance adoption rates such as the manufacturing sector, where less than 5% of businesses have cyber insurance coverage.

In full, the report:

• Projects the growing demand and premiums for cyber insurance in comparison to other common forms of commercial insurance.
• Illustrates how cyber attacks are growing more sophisticated and more costly, which is driving more companies to consider cyber insurance.
• Explains the obstacles that insurers face in extending cyber insurance coverage to different types of businesses.
• Provides insights on how insurers can overcome these challenges to grow their cyber insurance business without incurring too much risk.

To get your copy of this invaluable guide to cyber insurance, choose one of these options:

1. Purchase an ALL-ACCESS Membership that entitles you to immediate access to not only this report, but also dozens of other research reports, subscriptions to all 5 of the BI Intelligence daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of cybersecurity.