There is hardly any business today that is not in the process of integrating one form of technology or another into its operations and digitising its business models. It is being proven increasingly that a tech-enabled business model is the quickest route to efficiency and scale, especially as infrastructure and integration costs continue to drop and internet and mobile penetration increase.
On the flip side of these tech innovations is a parallel growth and exposure to cyber risks. According to the Nigerian Communications Commission (NCC), Nigeria recorded 13 million cyberattacks in the first six months of 2023. The Nigerian Cybercrime Report showed that the country lost an estimated ₦128 billion to cybercrime in 2020 alone. Furthermore, according to a December 2024 report by Business Day Newspaper, “a recent survey by the NCC revealed that over 90 percent of Nigerian businesses have been victims of cybercrime, with the average cost of a cyber-attack exceeding ₦10 million”. Another Punch newspaper report stated that the NCC claimed that Nigeria “is losing $500 million annually to all forms of cybercrime, including hacking, identity theft, cyber terrorism, harassment, and internet fraud.”
The rate, scale, and spate of cyber risks to businesses and government operations are even more concerning when viewed holistically from a global, local, or continental lens.
As a tech enthusiast and a business leader, I must admit that the thrills of the possibilities of technology in business model innovation can be so exciting that we can easily ignore its risks. This is why business leaders must drive retooling their risk management framework to test for emerging threats within the evolving cyberspace.
My vantage position as an insurance expert and business leader has got me thinking about the vulnerabilities of new, emerging, and existing business models to cyber risk. While I am excited by the socio-economic impact these innovations mean for Nigeria, I have remained curious about how to protect these businesses from the impact of cyber risks.
For example, Nigeria’s increasing adoption of digital payment systems, cloud storage, and customer relationship management platforms is transforming business operations. However, as more data is collected and stored digitally, the risk of breaches also rises exponentially.
On the other hand, as companies expand digital access across the organisation, they inadvertently increase the likelihood of access to sensitive information. Internal or external, a data breach can take customers’ distrust from zero to a hundred in the twinkle of an eye, resulting in huge regulatory penalties or litigation – or both. None of this is good for business operations or reputation.
At another level, business models also face the emerging risk of digital integration. Today, business models are described as ecosystems. The successes of this interconnectedness are prevalent in transportation, logistics, fintech, and insurtech, where third-party integrations and data-driven algorithms are driving scale that we have never seen before.
Unfortunately, these dependencies introduce unique vulnerabilities that businesses must address. For example, APIs connecting different systems can be attacked by cybercriminals to disrupt operations or manipulate transactions.
Thirdly, securing essential services such as cloud hosting and cybersecurity solutions from third parties is now commonplace locally as the economy becomes globalised. This reliance also creates exposure to supply chain attacks, where cybercriminals infiltrate a vendor’s systems to access the client’s network.
Rethinking insurance models
As businesses and institutions confront these emerging risks, the insurance industry must provide innovative, relevant solutions that address today’s challenges while anticipating tomorrow’s threats.
New realities are proving that our traditional policies need to match the complexities of modern cyber risks. Cyber insurance products must go beyond compensating for damages after an attack. Instead, our solutions must include pre-emptive risk assessment services, incident response support, and continuous cyber threat monitoring.
As we embark on our tech journey, our sector must forge strategic partnerships with businesses and tech innovators to better understand emerging risks and design solutions that can support tech-driven business models.
While insurance seeks new ways to protect businesses and institutions, our industry must embrace tech opportunities to defend itself and improve its services. Blockchain, for instance, has immense potential to revolutionise our claims processing. It will enhance transparency and reduce fraud, which will, in turn, reduce the time to claim payment, consequently boosting customers’ trust in our industry.
Finally, the Nigerian insurance sector has a critical role in educating businesses about the importance of cyber risk management. Many businesses are still in the euphoria of the tech wave and remain unaware of the risks technology and digitisation pose to their operations. We must conduct awareness campaigns and workshops on risk identification programmes for employees, encourage multi-factor authentications across all entry points, and conduct joint risk assessment sessions to bridge this knowledge gap. We must help our clients realise that the duty of care of their cyber environments also lies with them. It’s impossible to transfer all risks; the residual risk could be the Achilles heel that brings down a promising firm.
As we navigate the intersection of technological innovation and the threats of cyber risk, business leaders must appreciate the stakes and ensure that our pursuit of digital transformation is balanced with a vigilant approach to cybersecurity.
Source: Businessday
