350-201 Question 21
Single answerA financial institution has implemented multiple layers of security to protect its sensitive customer data. Despite these measures, the organization understands that no system is completely immune to cyber threats. To further mitigate potential financial losses and recovery costs in the event of a cyberattack, the institution is considering purchasing cyber risk insurance. What is the primary purpose of cyber risk insurance in this scenario?
- A
To replace the need for cybersecurity technologies and processes
- B
To provide financial coverage for damages and recovery efforts after a cyber incident
- C
To eliminate the risk of cyber threats entirely
- D
To ensure compliance with all regulatory and legal cybersecurity requirements
Show answer and explanation
Correct answer: B
Explanation
Cyber risk insurance serves as a financial safety net for organizations, helping them recover from the financial impact of cyber incidents such as ransomware attacks, data breaches, or system downtime. While it does not replace cybersecurity measures or eliminate threats, it provides critical financial coverage for post-incident recovery, legal expenses, and other damages.
- A. Incorrect.
Cyber risk insurance does not replace cybersecurity technologies or processes. It is meant to complement them by covering financial losses after an incident.
- B. Correct.
This is correct. The primary purpose of cyber risk insurance is to provide financial support for recovery efforts, legal fees, fines, and other damages incurred due to a cyberattack.
- C. Incorrect.
Cyber risk insurance cannot eliminate cyber threats but can help mitigate the financial impact when such threats materialize.
- D. Incorrect.
While cyber risk insurance can assist in some compliance-related aspects, its main purpose is not to ensure regulatory compliance but to cover financial losses.