Resilience: Third-party risk drives cyber claims and losses in 2024

By Mia MacGregor

Feb 27 - (The Insurer) - Third-party risk emerged as a major driver of cyber insurance claims and material losses in 2024, according to new data from cyber insurtech MGA Resilience.

Resilience’s cyber insurance claims data revealed that third-party risks, including ransomware and outages affecting vendors, accounted for 31% of all claims in 2024.

Additionally, the cyber firm highlighted that third-party risk led to incurred losses for the first time ever, making up nearly a quarter (23%) of incurred claims in 2024, compared to 0% in 2023.

"Third-party risk isn't only making headlines — it's driving unprecedented losses. While this risk is often invisible until it's too late, it's now clear that the industry has reached a tipping point," said Vishaal "V8" Hariprasad, co-founder and CEO of Resilience.

"Businesses can no longer afford to consider their partners' vulnerabilities as siloed from their own. By understanding this new reality of shared risk, enterprises can make smarter business decisions and meaningfully mitigate material loss."

The report also found that ransomware remained a leading cause of loss in 2024, with 43% of incurred claims involving first-party ransomware incidents and 18% involving ransomware attacks targeting vendors.

In total, 61% of all claims with losses were related to ransomware.

Additionally, the report noted that transfer fraud gained traction, rising from 14% of incurred claims by frequency in 2023 to 18% in 2024.

Transportation, manufacturing and healthcare sectors had the highest frequency of incurred claims, likely due to their reliance on outdated operational technology and high downtime costs, according to Resilience.

Healthcare and finance sectors led in claim reporting frequency, which Resilience noted was potentially due to their stricter regulatory environments and the requirement to report incidents, even those not deemed material.

Despite these challenges, the report noted that there are silver linings.

Phishing, once a primary point of failure, proved less effective in causing financial loss in 2024. Phishing led to just 9% of incurred claims, a significant drop from 20% in 2023, according to the report.

Jeremy Gittler, global head of claims at Resilience, noted: "Even in the face of an evolving threat landscape over the past year, enterprises are continuing to make major improvements in how they manage cyber risk and prevent material loss."