Cyber Insurance Isn't a Safety Net – It's a Signal: Why True Cyber Resilience Goes Beyond Coverage

For many businesses, taking out cyber insurance has become just another administrative task – a form to fill, a box to tick, a premium to pay. The assumption is that if you're covered, you're protected.

But the reality is far more complex.

The False Comfort of Coverage

Cyber insurance is now a multi-billion-pound industry, and for good reason. The threat landscape has evolved dramatically over the past decade. What was once the concern of large corporations and government agencies is now a daily reality for SMEs across every sector.

According to recent government statistics:

• 32% of UK businesses experienced a cyber security breach or attack in the last 12 months
• The average cost of a cyber breach for medium-sized businesses is £19,400
• For larger businesses, that figure rises to £35,960
• Ransomware attacks on UK businesses increased by 77% year-on-year

Faced with these statistics, it's no wonder businesses are turning to insurance as a solution. But here's the uncomfortable truth:

Insurance helps you recover. It doesn't stop the incident from happening in the first place.

And in the world of cyber security, prevention is infinitely better than cure.

Those Questionnaires Aren't Red Tape – They're a Roadmap

When you apply for cyber insurance, you're faced with pages of detailed questions:

• Do you use multi-factor authentication (MFA) across all systems?
• How frequently do you back up critical data?
• Are backups stored offline or in a separate, secure location?
• Do you have an incident response plan?
• When was your last penetration test?
• Do you provide regular cyber security training to staff?
• What access controls are in place for sensitive data?
• Do you use endpoint detection and response (EDR) software?
• How do you manage third-party access to your systems?

It's tempting to treat these as bureaucratic hurdles to jump through. But look closer, and you'll realize something important:

Every question is highlighting a potential vulnerability in your business.

Insurers aren't asking these questions out of curiosity. They're asking because these are the exact areas where businesses get compromised. These are the gaps that cyber criminals exploit.

The questionnaire isn't just determining your premium – it's giving you a roadmap of where your defenses need strengthening.

Cyber Criminals Work 24/7/365 – Are You Prepared?

Here's a sobering thought: while your team clocks off at 5pm on Friday and enjoys the weekend, cyber criminals are just getting started.

Modern cyber attacks are:

• Automated – bots scan for vulnerabilities constantly, never sleeping
• Sophisticated – ransomware gangs operate like professional businesses with customer service teams
• Opportunistic – attackers don't target specific companies; they target vulnerabilities wherever they find them
• Global – an attack can originate from anywhere in the world at any time

This means that cyber resilience can't be a 9-to-5 concern. It needs to be embedded into the way your business operates, every day, in every decision.

The question isn't "Are we likely to be targeted?" but rather "When we're targeted, will our defenses hold?"

The Chain is Only as Strong as Its Weakest Link

And the conversation shouldn't stop at your own systems.

In today's hyper-connected business environment, risk rarely sits neatly within your own four walls. Consider:

Your Supply Chain

Every supplier, partner, and contractor who has access to your systems or data represents a potential entry point. In 2021, a major attack on SolarWinds compromised thousands of organizations – not because those organizations were vulnerable, but because their trusted software supplier was.

Questions to ask:

• What cyber security standards do your suppliers meet?
• Do they have cyber insurance?
• What access do they have to your data and systems?
• How quickly would you know if they were compromised?

Your Software and Cloud Providers

You might have excellent security practices, but if your cloud hosting provider suffers a breach or your critical software vendor is hit with ransomware, your operations can still grind to a halt.

Considerations:

• Do you have contingency plans if a key service provider goes offline?
• Are your contracts clear about responsibility and liability for security incidents?
• Do you have visibility into their security practices?

Your Customers and Partners

Data flows in both directions. If you handle customer data or connect your systems with partners, you're not just responsible for your own security – you're a link in their security chain too.

Your responsibilities:

• Protecting customer data to the highest standards (GDPR compliance is just the baseline)
• Ensuring you don't become the weak link that compromises your partners
• Building trust through transparency about your security practices

Your People

Your employees are your greatest asset – and potentially your greatest vulnerability. This isn't about blame; it's about reality.

Phishing remains one of the most effective attack vectors because it targets human psychology rather than technical defenses. A single employee clicking a malicious link can bypass millions of pounds worth of security infrastructure.

The solution isn't stricter rules – it's better training, clearer procedures, and a culture where security is everyone's responsibility.

What True Cyber Resilience Looks Like

Cyber resilience isn't about passing an annual audit or securing a policy renewal. It's about embedding awareness and good practice into the way your organization operates.

1. Make Security Part of Your Culture

• Regular training – not just an annual compliance exercise, but ongoing awareness
• Open communication – employees should feel comfortable reporting suspicious activity without fear
• Leadership buy-in – security needs to be a board-level priority, not just an IT concern

2. Implement the Fundamentals

The basics aren't glamorous, but they prevent the vast majority of attacks:

• Multi-factor authentication on all systems, especially email and remote access
• Regular patching and updates – most breaches exploit known vulnerabilities with available patches
• Strong password policies and password managers
• Principle of least privilege – users should only have access to what they need
• Regular, tested backups stored securely offline

3. Plan for the Worst

Hope for the best, but prepare for the worst:

• Incident response plan – what do you do if you're compromised? Who do you call? How do you communicate?
• Business continuity planning – can you operate if your systems are down for a day? A week?
• Regular testing – plans are useless if they've never been tested under pressure

4. Know Your Risk Landscape

• Regular security assessments – understand where your vulnerabilities are
• Third-party audits – get an external perspective on your defenses
• Threat intelligence – stay informed about emerging threats in your sector

5. Build Resilience Across Your Network

• Vendor due diligence – assess the security posture of your suppliers and partners
• Contractual protections – ensure clear terms around security responsibilities
• Collaboration – share threat intelligence and best practices with partners

Insurance is There to Help You Recover

None of this is to say cyber insurance isn't valuable. It absolutely is.

When the worst happens, insurance can:

• Cover the direct costs of incident response (forensics, legal fees, PR)
• Compensate for business interruption losses
• Pay ransom demands (though this is increasingly contentious)
• Cover regulatory fines in some cases
• Provide access to specialist incident response teams

But insurance can't:

• Restore your reputation instantly
• Eliminate the operational disruption
• Prevent customer loss due to breached trust
• Recover the time and focus diverted from running your business
• Guarantee that all your data can be recovered

The real cost of a cyber incident goes far beyond the financial.

Your Mindset is What Stops You From Needing It

The businesses that fare best in the face of cyber threats aren't necessarily those with the biggest IT budgets or the most sophisticated tools.

They're the businesses that treat cyber security as:

• A strategic priority, not a technical problem
• An ongoing process, not a one-time project
• Everyone's responsibility, not just IT's job
• A competitive advantage, not a compliance burden

The mindset shift is this: Cyber insurance is a backstop, not a strategy.

Your actual strategy should be making sure you never need to make a claim.

Taking Action

If you're reading this and wondering where to start, here are some immediate actions:

This Week:

1. Review your cyber insurance policy and questionnaire – treat it as a security audit

2. Enable multi-factor authentication on all email and critical systems

3. Schedule a team discussion about cyber security awareness

This Month:

1. Conduct a basic security assessment or commission an external audit

2. Review and test your backup and recovery procedures

3. Create or update your incident response plan

4. Assess your key suppliers' security practices

This Quarter:

1. Implement a regular security training program

2. Review access controls and implement least-privilege principles

3. Conduct a tabletop exercise simulating a cyber incident

4. Establish clear accountability for cyber security at board level

The Bottom Line

Cyber insurance isn't a safety net – it's a signal.

It signals that the threat is real, that the costs can be catastrophic, and that even the most confident businesses recognize they might need help.

But the real signal should be about your approach to resilience. Are you treating cyber security as something to be insured against, or as something to be actively defended against?

The businesses that thrive in the digital age won't be those with the best insurance policies. They'll be those with the strongest defenses, the most aware teams, and the resilience to withstand attacks that inevitably come.

Insurance helps you recover. But your mindset, your culture, and your daily practices are what stop you from needing it.

---

Need help assessing your cyber resilience or developing a robust security strategy? Nexus Management Solutions provides comprehensive risk management and operational consulting to help businesses strengthen their defenses. Get in touch →