Question

A retail company has implemented layered defenses, an incident response plan, and regular vulnerability management. During a board meeting, the CISO recommends purchasing a cyber risk insurance policy despite these controls. A board member questions why insurance is necessary when strong security controls already exist. Which statement best explains the primary purpose of cyber risk insurance in this context?

Accepted Answer

It transfers the financial impact of residual risk that remains after security controls are applied, covering costs such as breach response, legal fees, and regulatory fines

Answer

It replaces the need for technical security controls by guaranteeing that all breaches will be prevented by the insurer's monitoring team

Answer

It eliminates the organization's compliance obligations under standards such as PCI DSS and GDPR by shifting accountability to the insurer

Answer

It reduces the likelihood of an attack occurring by actively patching vulnerabilities on the organization's behalf