Data threats in the healthcare sector: The impact of system failure
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As the world becomes increasingly more digital, so too does the healthcare sector. For healthcare providers in the private sector, this digital era brings significant advancements in their services—from streamlined patient management systems to enhanced care delivery.
However, this digital revolution also introduces a new risk landscape for many organisations. Cyberattacks can disrupt operations, lead to substantial financial losses, and even compromise patient safety.
Howden received over 600 cyber claims notified to us last year, and reports show that the healthcare industry is particularly targeted, largely due to the management of sensitive medical records, which the FBI states are 10 times more valuable on the black market than credit card numbers. [1]
For healthcare providers, understanding this evolving threat landscape and how best to defend against it is paramount. This article aims to outline the key cyber threats to your business and provide guidance on how to protect your organisation from these risks.
Data Breaches – A Major Cyber Threat
A data breach occurs when unauthorised individuals gain access to sensitive information, such as patient records, financial details, and other confidential data. For healthcare providers, the data they manage is a goldmine for cybercriminals because of its highly sensitive nature. Hospitals and other healthcare facilities are particularly attractive targets for cybercriminals, as the records they hold are highly valuable on the dark web and can be exploited in various fraudulent activities.
Howden’s proprietary data indicates that 37% of cyber claims notified to us within the healthcare industry have been data breaches. Additionally, a report from SecurityScorecard revealed that 35% of third-party breaches in 2023 impacted healthcare organisations, surpassing all other sectors. [2]
Data breaches can have significant downfalls for any business. Financially, the consequences can be daunting, with organisations facing substantial costs due to legal fees from potential lawsuits, as well as fines and other penalties. Failure to adequately protect patient data can result in hefty fines from the ICO.
Operationally, a data breach can force an organisation to sacrifice their usual business services, redirecting resources and focus on breach mitigation efforts. For many sectors, this sacrifice might only result in financial losses due to unaccounted-for downtime, but for healthcare providers, this can lead to a decrease in the quality of care for patients.
Beyond the immediate financial and operational setbacks, a data breach can also result in a loss of competitive advantage and a significant erosion of trust from patients and their families. Trust and reputation are the foundation of any private healthcare provider and losing them can cause lasting harm to patient confidence. This erosion of trust may lead patients to seek care from other providers and can be one of the most challenging aspects for a healthcare organisation to recover from.
The Ransomware Epidemic
Ransomware is a type of malicious software that encrypts a victim’s data or locks them out of their systems until a ransom is paid, typically in cryptocurrency. Healthcare providers, particularly in the private sector, are prime targets for ransomware attacks for several reasons. Many facilities still rely on legacy software—older systems that are compatible with outdated equipment—which inherently possess vulnerabilities that are easily exploited by advanced cyber threat actors. Additionally, the critical nature of healthcare services means that prolonged downtime can be detrimental. The vital need to restore operations quickly to ensure patient safety is exploited by cybercriminals, who count on this urgency to pressure healthcare providers into paying the ransom.
According to the FBI’s 2023 Internet Crime Report, wherein 16 critical infrastructure sectors were analysed, healthcare had the highest number of organisations fall victim to ransomware attacks. The number of reported ransomware attacks directed at U.S. hospital systems almost doubled from 2022 to 2023, indicating that ransomware threat actors are increasingly focusing on healthcare institutions. [3]
Financially, the costs associated with a ransomware attack in the healthcare sector can be substantial. A notable example occurred in 2017 when the WannaCry ransomware attack targeted the UK’s National Health Service, causing widespread disruption. Although no ransom was paid, the attack led to an estimated $100 million in direct costs and up to $4 billion in total economic losses due to the extensive impact on operations and prolonged recovery efforts.[4]
The operational fallout from a ransomware incident is equally severe. Critical business functions are often brought to a standstill, disrupting everything from patient record access to essential communication systems. These outages can have direct and devastating effects on patient care. For example, in 2020, a hospital in Düsseldorf, Germany, suffered a ransomware attack that rendered them unable to treat patients. This led to the tragic death of a woman who had to be sent to another hospital, dying in transit due to the delay. [5]
Fortifying Defences
To safeguard against these threats, healthcare providers must implement robust security measures and invest to keep their software and technology up to date. Regular security audits, employee training on best practices, secure payment systems, and data encryption are essential steps. Additionally, developing and regularly updating an incident response plan is crucial to minimise damage in the event of a breach.
Having a specialist insurance broker who understands the threats and can provide advice when things go wrong can prove a major help. As a result of the increased threat, more organisations within the sector are coming to realise that a specialist policy can no longer be regarded as a discretionary spend. Given the sensitive nature of the data handled and the increasing frequency of cyberattacks in the healthcare sector, having additional coverage outside of standard insurance is a prudent risk management strategy.
Our healthcare team is available to answer any queries and discuss our cyber insurance solutions with you. You can get in touch with us on +44 (7395) 796688 or at [email protected].