Embroker’s latest Cyber Risk Index has revealed that cybersecurity will remain the single biggest concern for startup founders in 2023 despite significant economic headwinds.
The report, published yesterday (December 8), compiled a survey of over 400 VC-backed startup founders, finding that many remain pointedly focused on advancing their cyber security protections moving forward.
Nearly one-third (31%) of founders interviewed said they were more concerned about cybersecurity threats than a year ago, whilst their expectations for the likelihood of cyber attacks from 36% in 2021 to 50% in 2022, a 14% increase year over year.
“As the financial and reputational costs of dealing with cyber security incidents continue to increase, businesses large and small are decidedly incentivized to invest in their digital security and risk management strategy, said David Derigiotis, Chief Insurance Officer at Embroker.
2022: The year of the cyber-attack
The findings arrive at the end of a year plagued by cybercriminal activity. A staggering 90% of organisations falling victim to cyber-attacks over the past twelve months- and the ramifications were more significant than ever.
In January 2022, a U.S. prison fell victim to a cyberattack that shut down CCTV cameras and automatic doors to enable prisoners to escape.
In April, Costa Rica declared the first-ever state of emergency caused by a ransomware attack when its ministry of Finance was overwhelmed by a Russia-linked cyber gang.
Meanwhile, in August, the British NHS was left paralysed by a series of ransomware attacks that forced medical staff to resort to note-taking and emails to keep track of patient records.
Cyber-attacks of such magnitude are likely to persist and evolve into the new year, exacerbated by the remote and hybrid working environment that more and more companies have adopted since the pandemic.
“Remote and dispersed workforces will continue to pose security challenges for organisations large and small, and social engineering tactics will continue to be a key method for adversaries to obtain employee data and credentials,” the report highlighted.
To read more about cyber attacks, visit our dedicated Business Continuity Page
The pressure of these attacks on startup founders is clear. Embroker revealed that it has seen a notable increase in cyber – from 15% in Q1 2022 to 22% in Q2.
Meanwhile, this year nearly half (49% of founders surveyed by the insurtech found that they purchased cybersecurity insurance due to pressure from their investors, their board, or both.
Looking forward to 2023 and beyond
2023 is not only set to be a year marked by cybersecurity trends for startups, but also a challenging fundraising landscape, inflation woes and difficult operational decisions.
But among the “non-negotiable areas of investment,” cybersecurity ranks closely behind product innovation, with 31% highlighting it as the main area of investment for the coming year. For startups to be successful, it is therefore clear that they must invest big in cybersecurity to protect themselves against the risk.
The fact that this ranking above supply chain challenges and equipment upgrades demonstrates how focused startup founders are on protecting and reinforcing their company’s infrastructure in the new year.
Even though a majority of startups plan to invest in substantial cyber insurance coverage, the Embroker report highlighted that many are uncertain of how much risk is covered – and if they are even completely protected from cybercriminals at all.
Of the founders that said their company had cybersecurity measures in place (86%) only 52% described their coverage as either “customised to our needs” or “the most comprehensive package available.”
