August 11, 2022

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GAO Reports – Response to Catastrophic Cyber Attack

This week the Government Accounting Office published a report looking at
potential responses to address the financial fallout from a catastrophic cyberattack
on critical infrastructure. It concludes that there are some major shortcomings
in current insurance programs. It recommends that DHS and the Treasury Department
take a concerted look at the situation and come up with potential program

Specifically, the report notes (pg 1):

“Cyber insurance and the Terrorism Risk Insurance Program
(TRIP)—the government backstop for losses from terrorism—are both limited in
their ability to cover potentially catastrophic losses from systemic
cyberattacks. Cyber insurance can offset costs from some of the most common
cyber risks, such as data breaches and ransomware. However, private insurers
have been taking steps to limit their potential losses from systemic cyber
events. For example, insurers are excluding coverage for losses from cyber warfare
and infrastructure outages. TRIP covers losses from cyberattacks if they are
considered terrorism, among other requirements. However, cyberattacks may not
meet the program’s criteria to be certified as terrorism, even if they resulted
in catastrophic loss.”