The latest 2024 Cyber Risk Index from Embroker reportedly shows coverage confidence increase, even as startups fear AI’s (artificial intelligence) shadow.
Embroker‘s 2024 Cyber Risk Index is focused on revealing how founders are approaching cyber risk and “how they feel about coverage.”
As cyberattacks continue to dominate headlines and wreak havoc on businesses of all sizes, VC-backed startup founders are “turning to cyber coverage as a crucial layer of protection.”
Cyber insurance adoption is climbing as startups learn to navigate the ever-evolving minefield of modern risks and challenges.
For their third annual Cyber Risk Index report, Embroker surveyed more than 500 VC-backed startup founders to shed light on how their perception of cyber risk is shifting in real time.
As startups face concerns around AI, Internet of Things (IoT) devices, and biometric authentication systems, they are reportedly “doubling down on cyber protections.”
Even though there’s the rising tide of concerns, founders remain optimistic, putting their faith in a combination of “robust insurance policies, top-notch cybersecurity vendors, and strong internal teams.”
This year’s survey reveals that cyber insurance is no longer a “break glass in case of emergency” tool — startups are leveraging it as “part of their growth strategy.”
The adoption of cyber insurance hit an all-time high, with “93% of startups covered, up from 90% in 2023 and 86% in 2022.”
So, why are company founders / business owners flocking to cyber coverage? Well sure, it is, to an extent, about risk mitigation (cyber threats are only getting more and more complex).
However, here are more insights from Embroker:
- 40% say cyber insurance has smoothed their path to funding.
- 41% use it as a springboard for additional services, like post-attack response support.
- 41% note it satisfies customer and vendor demands.
For startups, cyber insurance isn’t “just about survival — it’s become a critical lever for growth and credibility.”
Cyberattacks are every founder’s “worst nightmare” as they threaten the foundation of their business. And the numbers don’t lie — 81% of founders surveyed have faced a “cyberattack in their careers, up from 78% in 2023 and 67% in 2022.”
While these stats aren’t exactly reassuring, here’s the silver lining: Founders’ faith in their insurance policies “is surging as well.”
Up from 87% last year, 93% of founders now believe “their insurance would at least partially protect them in a breach.”
And when it comes to cyber coverage in 2024, “simplicity” is the name of the game:
- 48% of founders opted to add cyber to their existing insurance packages, a jump from just 22% in 2023.
- Only 7% of startups chose the most comprehensive cyber coverage in 2024, down dramatically from 27% last year.
In the coming year, they expect startups to continue mastering the “art of balance” — keeping equal parts focus “on simplicity and strength in their cyber protections to stay resilient in an ever-changing environment.”
Founders are anxious about malicious AI, and who can blame them?
- 90% report fears over AI’s potential harm, consistent with last year’s findings.
- 75% worry about AI-generated deepfakes or disinformation campaigns damaging their company’s reputation.
Unfortunately, these concerns are anything but “far-fetched.”
From fake election ads to viral disinformation, AI’s disruptive power “has been on full display.”
Despite high anxiety, founders’ confidence in their ability “to handle AI threats is growing — if their company was subjected to malicious AI today, 82% feel they can successfully combat or recover from it, compared to 76% last year.”
In addition to this, 81% say they’re conducting risk assessments to “identify potential cyber threats posed by AI, another indicator that they are taking proactive measures to mitigate their vulnerabilities.”
Although the pros and cons of AI remain hotly debated, founders are standing firm, largely “trusting their cyber protections to back them up.”
Startups are tweaking their playbook for cyber risk, most recently “pairing bold strategies with simpler coverage.”
Whether battling threats or navigating the AI-induced “headache,” they’re investing in the tools and protections that “matter most” according to the update from Embroker.
