[Teheran-ro] Cyber Insurance Is Not an Optional Expense

Cyberattacks are no longer isolated security incidents for individual companies. Personal information leaks from major platforms, telecommunications firms, and retailers lead to financial fraud, identity theft, and payment damages, causing a ripple effect throughout society. However, there are almost no mechanisms in Korea to absorb these shocks. While cyber risks are growing, the Cyber Insurance market that could distribute and buffer these risks is virtually nonexistent.
Cyber Insurance is not a specialized product solely for compensation after hacking incidents. It is a crisis management financial tool that covers business interruption losses, data recovery costs, liability for damages, incident response, and reputation management due to hacking, ransomware, or personal information leaks. It serves as a safety net to prevent companies from collapsing under the cascading impact of such incidents.
The global market already recognizes this as essential infrastructure. According to the Korea Insurance Research Institute (KIRI), the global Cyber Insurance market surged from $5.9 billion in 2019 to $14.1 billion in 2023. In contrast, the Korean market remains at just $3 million. This is not merely a sign of an immature market, but evidence of a structural deficiency in risk management systems.
Corporate awareness is also limited. Cyber incidents often lack physical damage, and losses are revealed later, making them easy to underestimate. Out of concern for reputational risks from disclosing incidents, companies have repeatedly chosen to bear risks internally rather than transfer them externally through insurance. In fact, a survey found that less than 5% of private companies reported having properly established and operated personal information processing systems. Regulations have also failed to stimulate insurance demand. While penalties under the Personal Information Protection Act have been strengthened, civil liability for damages remains limited. Even in large-scale data breaches, compensation per person is only tens of thousands of won. As a result, companies perceive cyber incidents as unlikely to lead directly to financial crises, reducing the perceived need for insurance.
Recent major incidents have sent a clear signal. Big Tech and large platforms have already become social infrastructure. Their security failures simultaneously shake financial markets, the real economy, and consumer trust. Unmanaged cyber risks have evolved into threats that endanger entire systems.
The conclusion is clear. Cyber Insurance is not an optional expense, but a financial infrastructure that disperses systemic risk. Companies must view cyber security not as a cost, but as a means of protecting corporate value. Insurers should evolve into comprehensive risk managers, covering both pre-incident security assessments and incident response. The government must lay the groundwork for a functioning market by strengthening punitive damages, expanding disclosure requirements, and introducing public-private Cyber Insurance programs. Cyberattacks have already become a part of daily life.
imne@fnnews.com