Cyberrisk is a conundrum. While sharing characteristics with a wide variety of risks, it is unique in the way these characteristics mesh to form something that is difficult, if not impossible, to truly define or quantify. Consider some of the more common types of cyberrisk for which insurance coverage is available: physical damage to hardware; breach response costs; third-party liability; misuse of social media; and cyberextortion, to name a few. These coverages share characteristics with traditional property, liability, crime and directors’ and officers’ policies. Cyberrisk is a multidimensional threat with no surefire defenses. Firewalls and antivirus software just aren’t enough anymore when it comes to cybersecurity. Whether you are looking at what is at risk, what the threats are, what the defenses are, or what your legal obligations are, there are no simple answers.

There are two main reasons for the complexity surrounding cyberrisk: the ubiquitous nature of computers in today’s society, and people. In the last 40 years, we have gone from personal computers being unheard of to handheld devices that can do more than machines that used to fill a room. There are now more devices connected to the Internet than there are people on the planet, according to Cisco. Estimates from Morgan Stanley put the number of devices that will be connected to the Internet by 2020 at 75 billion (more than 10 for each person currently on the planet). Each device represents a potential access point, and thus a security threat.

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