Cyber Risk Legal Update - 2016

DAC Beachcroft Adviser Newsletter

Cyber Risk legal update | May 2016

Government pushes Cyber Security Strategy

2016 sees the launch of the UK's second National Cyber Security Strategy.  The first was launched in 2011 as a result of the 2010 National Security Strategy, which identified cyber crime as one of the top threats to the UK.  

The programme aimed to build the UKs cyber security capabilities and make the UK more resilient to cyber crime and one of the safest places in the world to do business online. However, 5 years is a long time in the cyber world - in 2010 the Internet of Things barely existed; in 2016, over six billion connected devices are in use worldwide, set to rise to over 20 billion by 2020.

Last year's National Security Strategy confirmed cyber crime's place as a "tier 1" threat to the UK's economic and national security; the threats are ever changing and uncertain: a new strategy, and greater investment, is required to ensure the UK stays ahead of the game. In recognition that there is more work to do, the government has promised to increase investment in cyber security from £869 million to £1.9 billion over the next 5 years.

On 18 April 2016, the government published its final report on the 2011-16 cyber strategy. The report summarises progress, reviews the impact of the programme and looks ahead to the 2016 strategy

The report notes that businesses of all sizes and sectors are better protected now than they were in 2011. According to the 2014-15 Cyber Governance Health Check of FTSE 350 companies,  88% of companies now actively consider cyber security as a business risk and included it in their risk register, up 30% on the previous year. Awareness among small businesses remains patchy, but it is noted that over 2000 Cyber Essentials and Cyber Essentials Plus certificates have been issued, and over 77,000 users have completed Cyber Essentials online training for small businesses.

It also reports that people are now being prosecuted for cyber crimes. However, given that the Office for National Statistics estimated that over 5 million instances of online fraud and 2.5 million cyber crimes took place last year the figures are far from encouraging. The number of live cyber crime cases being prosecuted by the CPS Organised Crime Division rose from 13 in October 2011 to 50 in December 2015, and the number of finalised crime cases increased over the same period from 2 to 43 (not including cyber cases dealt with by other sections of the CPS.)

While such incidences of cyber crime could be a small-scale phishing attack on you or me, it could also extend to an attack on a national bank, with much greater consequences, as experienced by the Bangladesh National Bank in February, resulting in access to the SWIFT banking system and an attempt to steal US$951m (of which US$81m is still unaccounted for).

To tackle such a range and extent of threats, it is clear that ongoing focus and investment is required, and the government's updated Cyber Security Strategy, and the investment that goes with it, is to be welcomed.

Cyber Business Interruption

In other news, earlier this year, DAC Beachcroft and RGL Forensics hosted a seminar on Non-Physical Business Interruption (BI) and cyber insurance. We reviewed the evolution of cyber risk insurance and considered some of the challenges and issues when dealing with cyber BI claims. We also worked through two case studies based on real life events.

We were overwhelmed by the interest and demand for the seminar and are pleased to make available a video of the entire event for those who want to review the content again or for those that could not make it on the day. We've also produced four short videos addressing key points about the nature of Cyber BIwaiting periods and deductiblesthe Uber Law case study and the Mega Play case study.

For more DAC Beachcroft cyber updates, please follow us on Twitter at @legallnutt and @hillegal1970.

For DAC Beachcroft privacy updates, please follow us on Twitter at @DACBprivacy.

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For more information on DAC Beachcroft please contact:

DAC Beachcroft Adviser Newsletter

Rhiannon Webster, Partner

+44 (0) 20 7894 6577

[email protected]

DAC Beeachcroft - Cyber Team

Hans Allnutt, Partner
+44(0)20 7894 6925
Email Hans
Rhiannon Webster, Partner
+44(0)20 7894 6577
Email Rhiannon
Patrick Hill, Partner
+44(0)20 7894 6930
Email Patrick
Helen Nuttall, Solicitor
+44(0)20 7894 6937
Email Helen