How Ukraine’s war affects your insurance and more
Russia's invasion of Ukraine is set to have severe repercussions in Australia. Businesses are now at a higher risk of cyber attacks, increased commodity prices for imports and exports, inflation and pricier insurance premiums as a result of the attack.
The situation in a nutshell
Before Russia invaded the former Soviet republic of Ukraine in late February, the latter had a population of 44 million. Within a fortnight, more than two million Ukrainians had fled their country. By that time, 516 people had been killed and 908 had been injured, according to Statista.
Why is this happening?
Russian President Vladimir Putin said in a TV address on 24 February that his country could not feel "safe, [to] develop and exist" due to the [perceived] constant threat from Ukraine, says the BBC. That same day the war, or in his words, the "special military operation" to demilitarise and de-Nazify democratic Ukraine, began. In reply, Volodymyr Zelensky, Ukraine's Jewish president, has asked, 'How could I be a Nazi?'.
Why Ukraine's invasion is a cyber risk to Australian businesses
Pre-war, Russian 'hacktivists' wreaked havoc for financial gain, but are likely to do so for political gain as well now, said a panel of cyber experts on an ABC Radio tech show on 10 March.
Elsewhere, security experts say Russian cyber hackers are not yet likely to attack Australians directly in response to the new financial sanctions we've placed on their country.
But how else could Australia be attacked?
Think of the domino effect of collateral damage. More than 100 international companies, including Google, IBM, Amazon, Boeing and Visa are clients of Ukrainian IT companies. If those providers are attacked, it could lead to a breach or failure of essential services for Australian businesses. In that case, you'd need to notify regulators and there'd be impacts on your customers or clients.
Even if Australian companies have cyber insurance policies, evolving situations can be complex and it's best to discuss your coverage with us. In essence, such policies usually exclude losses resulting from war.
Protect your business in every possible way to limit your risk of cyberattacks. They may range from denial-of-service campaigns, defaced websites, or ransomware of data theft via hacking. The Australian Cyber Security Centre urges Australian organisations to review their cyber-security incident detection, mitigation and response measures. Use their Cyber Incident Response Plan as a guide.
Imports and exports (higher commodity prices and inflation)
The war is expected to impact Australia through trade – we're Ukraine's key economic partner in the Oceania region. We import about $40 million of mainly edible oils, fertilisers, machinery, metallurgy and vessels and export $110 million in pharmaceuticals, optics, machinery, jewellery, carton and paper. Australian sanctions also mean our country's businesses are restricted from dealing with Russia, says our Department of Foreign Affairs. However, that direct impact is minuscule as Russia ranks #42 on our trading partners list.
You'll feel another nasty indirect impact at the bowser, with petrol prices expected to reach an average of $2.10 a litre. That's due to global oil price increases as a result of the war. Grains, fertiliser, metals and energy commodity prices are also expected to rise. The flow-on effect of those increases means higher prices for agricultural produce and manufactured goods, fuelling inflation, says an ABC news report.
And the head of the Reserve Bank, Philip Lowe, has forecast the war will boost inflation around the world and cause another supply chain shock. Also expect insurance premiums to rise because of the higher risks, such as through cyberattacks.
Review your cyber insurance with us
You could be thinking cyber insurance won't protect your business from digital threats due to the Ukraine war. But, some policies will cover you just for the results of a data breach, while others will protect you from the entire spectrum of costs resulting from a cyber incident.
It's important to understand insurers' fine print around 'war' in an insurance policy – its intention may be to apply to armed conflict rather than cyber attacks. As well, it's not clear who – the insured or the insurer - has the onus to identify a cyber attack has come from a war zone or not.
Globally, insurance experts say the Ukraine conflict is testing the effectiveness of 'war exclusion' as well as 'hostile act exclusion' in policies.
So, with Australian businesses having a higher risk of cyber attacks due to the war, it's time to consider what a cyber security insurance policy does typically cover. It includes costs associated with:
Revenue loss due to interrupted business
Hiring negotiators and paying a ransom (on the latter, payment may be illegal in some circumstances)
Recovering or replacing your data or records
Liability and loss of third-party data
Defending legal claims, including for infringements regarding copyright and intellectual property
Investigations by a government regulator
Crisis management and monitoring
Preventing further attacks.
Now's the time to review your cyber security risk profile. We can guide you on your choices through this very fluid situation.