In a rapidly evolving digital world, cyber-attacks have become more frequent and sophisticated, prompting businesses to elevate their cybersecurity efforts and consider cyber liability insurance. The recent cybersecurity breaches faced by giants like MGM Resorts International and Caesars Entertainment underscore the gravity and unpredictability of such threats.
MGM’s Cyber Breach: A Wake-Up Call
On September 10th, MGM Resorts faced a massive cyber threat that disrupted its operations. Their digital hotel keys became inoperative, casino games halted, and their reservation system crashed, leading to significant losses and discontented guests. This breach was reportedly orchestrated by the ALPHV/BlackCat ransomware-as-a-service gang. In a distressing revelation, it was reported that the breach was executed simply by tricking MGM’s IT team into resetting an employee’s credentials over a call.
The startling simplicity with which a company valued at nearly $34 billion was compromised underscores how easily even well-protected businesses can fall prey to cybercriminals. However, MGM’s proactive approach to take its systems offline ensured the attack wasn’t even more catastrophic. This step allowed them to deal with the situation in a more controlled environment, highlighting the proactive measures businesses can take in such dire circumstances.
The Financial Implications and Insurance
As a result of the attack, MGM reportedly suffered losses between 10% to 20% of its daily revenue. A Wall Street analyst stated that these losses might be covered by a $200 million cyber insurance policy. While the full extent of MGM’s financial losses remains to be seen, cyber insurance could play a crucial role in mitigating some of the damages. Analysts are now estimating the total insurance claim to be around $100 million, most of which will come from loss of income due to the disrupted operations.
Casino competitor Caesars Entertainment also recently fell victim to a cyber-attack, and reportedly paid a $15 million ransom. This begs the questions, should companies follow the recommendation of the CIA and not pay ransom, but deal with the lasting consequences? Or are they better off acting as Caesars did and quickly pay the ransom and move on? In this case, I would guess that MGM and their insurance company wish they would have just paid the ransom and moved on.
The Importance of Robust Cybersecurity Defenses
Recent cyber breaches serve as a stark reminder that businesses need to strengthen their defenses. With increasing targeted attacks and sophisticated phishing efforts, organizations must defend their most critical assets diligently.
Moreover, the essence of cybersecurity is continuous learning. Training staff and employees about potential threats and suspicious activities is of paramount importance. As cyber threats evolve, so should our strategies to combat them.
Implications for the Insurance Industry
The rise in ransomware attacks is a clear indication for insurance underwriters to emphasize and promote robust cyber-hygiene practices among their clients. Relying on a single control or safety measure is inadequate. Organizations should anticipate potential failures and have multiple layers of security and verification in place.
In conclusion, the cyberattacks on MGM Resorts and Caesars Entertainment are testament to the unpredictable and destructive nature of cyber threats. These incidents underline the urgent need for enhanced cybersecurity measures and the growing importance of cyber liability insurance. Businesses, irrespective of their size, should recognize the value of comprehensive cybersecurity defenses and consider the safety net provided by cyber insurance policies.
Each month, Swarts, Manning & Associates covers relevant topics for your business. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
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