Cyber Recovery Costs Soar 50 per cent in 2024, Way Above Insurance Limits

• Cyber recovery costs have over the past one year increased to $2.73 million.
• The survey included responses from 5,000 IT and cybersecurity leaders in 14 countries, covering organisations with 100 to 5,000 employees
• Only 1 per cent of claimants said their insurance covered all costs

According to a new report by online security solutions provider Sophos, the recovery costs from cyber-attacks have outpaced insurance coverage.

The survey titled “Cyber Insurance and Cyber Defenses 2024: Lessons from IT and Cybersecurity Leaders,” shows that recovery costs from cyber-attacks are outpacing insurance coverage with only one percent of those that made a claim saying that their carrier funded 100 percent of the costs incurred.

The most common reason for the policy not paying for the costs in full was because the total bill exceeded the policy limit.

According to The State of Ransomware 2024 survey, recovery costs following a ransomware incident increased by 50 per cent over the last year, reaching $2.73 million (Sh353million) on average.

In the latest findings 97 per cent of those with cyber insurance improved their defenses to qualify for coverage, with 76 per cent saying it helped them get coverage, 67 per cent got better pricing, and 30 per cent secured improved policy terms.

The survey also revealed that recovery costs from cyber-attacks are surpassing insurance coverage. Only 1 per cent of claimants said their insurance covered all costs, with most facing bills that exceeded their policy limits.

Chester Wisniewski, Sophos’ Global Field CTO, noted that many cyber-attacks incidents result from not following basic cybersecurity practices, like timely patching.

“The Sophos Active Adversary report has repeatedly shown that many of the cyber-attacks incidents companies face are the result of a failure to implement basic cybersecurity best practices, such as patching in a timely manner.”

“In our most recent report, for example, compromised credentials were the number one root cause of attacks, yet 43 per cent of companies didn’t have multi-factor authentication enabled,” said Chester Wisniewski, director, global Field CTO.

Wisniewski emphasised that while cyber insurance encourages better security practices, it is just one part of a risk mitigation strategy.

Among 5,000 surveyed IT and cyber-security leaders, 99 per cent of companies that improved their defenses for insurance purposes also reported broader security benefits, such as improved protection and fewer alerts.

Wisniewski added that investments in cyber defenses can lead to insurance savings, which can further enhance cyber-security.

He notes that as more companies adopt cyber insurance, their overall security will improve, even though insurance alone won’t eliminate ransomware attacks.

The survey included responses from 5,000 IT and cybersecurity leaders in 14 countries, covering organisations with 100 to 5,000 employees and revenues ranging from under $10 million to over $5 billion.

Read Also: New report exposes alarming rise in remote desktop protocol fraud by cybercriminals

Cyber Recovery Costs

The amount organisations are paying to get back their data from cyber criminals increased by 500 per cent in the past year. Sophos, in its annual “State of Ransomware 2024” survey, says this has seen organisations that paid the ransom report an average payment of $2 million, up from $400,000 in 2023, with ransoms being just one part of the cost.

Excluding ransoms, the survey found the average cost of recovery reached $2.73 million, an increase of almost $1 million since the $1.82 million that Sophos reported in 2023.

Despite the soaring ransoms, this year’s survey indicates a slight reduction in the rate of ransomware attacks, with 59Per cent of organizations being hit, compared with 66 percent in 2023.

While the propensity to be hit by ransomware increases with revenue, even the smallest organizations [less than $10 million in revenue] are still regularly targeted, with just under half [47 per cent] hit by ransomware in the last year.

The 2024 report also found that 63 per cent of ransom demands were for $1 million or more, with 30 per cent of demands for over $5 million, suggesting ransomware operators are seeking huge payoffs.

Unfortunately, these increased ransom amounts are not just for the highest-revenue organisations surveyed. Nearly half [46 per cent] of organisaations with revenue of less $50 million received a seven-figure ransom demand in the last year.

Sophos field CTO John Shier says that the skyrocketing costs of ransomware attacks belie the fact that this is an equal-opportunity crime. The ransomware landscape offers something for every cybercriminal, regardless of skill.

Read Also: Payment for ransomware attacks increase by 500 per cent in one year