Cybersecurity has continued to be one of the most prominent challenges companies are facing, especially in financial services and insurance, often the most targeted industries. As we look ahead to the new year, the cybersecurity challenge shows no signs
of easing as threats become more sophisticated by the day.
That said, 2025 will mark an important shift in how the industry responds to cyber threats, and this will fundamentally change how businesses operate within their respective sectors. Many trends are likely to impact the industry in the new year, but there
are three underlying areas of development which will have the biggest impact: regulatory change, market consolidation, and the need for single end-to-end providers.
Shifting regulatory environment
The EU’s Digital Operational Resilience Act, better known as DORA, is to become applicable in early January 2025, and it will mark a landmark shift for cyber resilience moving forward. Cybersecurity and digital resilience have had an increasingly significant
impact on the market’s financial stability, and DORA will only elevate the role and importance of cyber resilience further.
The Act will mandate that stakeholders, including those in the insurance industry, bolster their cyber defences by implementing comprehensive measures to increase digital operational resilience, mitigate cyber threats and manage third-party IT risks. This
is no small feat, especially in the insurance industry, which thrives on the management of risk and the safeguarding of assets.
The regulatory environment is clearly high on the business agenda, with Clyde & Co’s
Corporate Risk Radar 2024 showing that 58% of respondents said regulatory and compliance burdens were among the high-impact threats to their business, up 9% since last year.
However, traditionally regulatory interventions have been met with scepticism and resistance, but DORA defies the narrative by acting as a catalyst towards greater transparency and accountability, as insurers will be expected to report major IT-related incidents
with a level of detail previously unseen. This will ultimately provide a foundation for building cyber resilience in the insurance industry. Importantly, transparency is not just for the regulators’ benefit, it will enhance consumer trust in a sector where
confidence is the currency, and trust translates into profitability and competitiveness.
Market consolidation
In 2024, cyber threats have given no indication of slowing, and this will help drive the continued trend of consolidation in the cybersecurity market. This reflects wider market expectations of seamlessness and sophistication in threat mitigation strategies,
and the market response and appetite for consolidation is not surprising, with
Gartner predicting that 70% of organisations will consolidate the number of vendors securing the lifecycle of cloud-native applications to a maximum of three vendors by 2025.
In this context, consolidation is marked by the need for a rapid response to increasing threat levels, and the answer will be to standardise processes and collaborate more effectively as an industry. The legal landscape also supports this consolidation,
as data protection regulations are tightening globally, including the GDPR in Europe and more novel regulations elsewhere around the world.
As markets embrace more mature legal frameworks, companies are leaning towards vendors who can ensure compliance across jurisdictions. Market consolidation will continue to be a major trend for the insurance and financial services sectors in 2025 with more
end-to-end solutions providers becoming the dominant players in the industry.
End-to-end security
Cybersecurity threats are increasingly becoming more sophisticated and relentless and there is a growing recognition that piecemeal defences are insufficient against adversaries employing ever-more complex attacks. In response, progressive leaders are increasingly
seeking end-to-end platforms that integrate proactive and reactive measures, from pre-emptive threat hunting to incident response.
Many companies are now seeking vendors that offer a complete suite of solutions, and interest in single-vendor relationships will only continue to grow in 2025. Over time, they offer clear advantages in management, accountability and cost efficiency, and
integrated systems from a single provider reduces complexity. In the face of increasing and more sophisticated cyber threats, these attributes have become a non-negotiable.
Market consolidation has also caught the attention of investors, who are watching closely as consolidation presents opportunities for strategic investment in firms which can lead the charge on integration. As a result, acquisitions and partnerships within
the sector will likely continue in 2025, as established companies aim to broaden their offerings and newer players seek to gain market share. Additionally, increased investment is likely to accelerate the pace of integration between insurance and financial
services firms and cybersecurity companies, as implementing end-to-end security measures as quickly as possible becomes the imperative.
Cybercriminals always find new and more sophisticated methods of attack, with the International Monetary Fund’s
Global Financial Stability Report in April 2024 showed that the number of cyberattacks has almost doubled since the COVID-19 pandemic. Equally, companies in the financial services and insurance sectors
are facing severe cybersecurity challenges, with the report also showing that nearly one-fifth of all incidents affect financial firms.
It’s evident that the threat level will only continue to accelerate and these sectors in particular are at risk. As a result, we are likely to see standardisation across the industry – from stricter regulatory requirements to strengthen market responsiveness,
consolidation and collaboration around cybersecurity and a drive from business leaders for one-stop, end-to-end solutions providers. Importantly, sectors such as insurance and financial services will be catalyst industries that help drive these changes.