By Ian Birdsey, Partner, Clyde & Co
Cybersecurity is now a critical operational risk – and one that boards are increasingly forced to confront head-on.
With high-profile breaches continuing to make headlines and cyberattacks growing in scale and sophistication, the question for organisations is not if they will be targeted, but when – making legal readiness not just a compliance necessity, but a strategic imperative.
Evolving cyber insurance
Cyber insurance plays a pivotal role in building resilience – offering not just a financial safety net, but also access to critical expertise and support throughout the lifecycle of a cyber incident.
One of its most overlooked benefits is the proactive risk management and support that policyholders receive. The insurance market – alongside its legal advisers – is exposed to a far higher volume and variety of cyber incidents than any single organisation. This gives insurers access to pooled intelligence, evolving best practices and pre-breach technical support.
In 2025, cyber policies are no longer passive documents; they are increasingly bundled with security tools, training modules and monitoring services designed to reduce risk at source. Leading insurers are working collaboratively with clients to identify vulnerabilities before they are exploited. In this way, insurance is becoming a strategic enabler of cyber resilience, not just a financial instrument.
Lessons from recent breaches
The proactive value of cyber insurance is especially clear in light of recent attacks on major UK retailers like Marks & Spencer and Harrods, which have exposed the fragility of consumer-facing sectors. Across all sectors, many vulnerabilities often stem from legacy IT systems that are dated and lack modern security protections.
Consumer focused sectors also tend to rely heavily on digital platforms for customer engagement, transactions and supply chain operations – making them especially vulnerable to ransomware and denial-of-service attacks.
Compounding this is their role as custodians of large volumes of valuable personal data. A breach can disrupt operations and trigger reputational damage, regulatory scrutiny and litigation. When a cyberattack becomes a public spectacle, the consequences multiply and preparedness becomes paramount – legal readiness must be built in, not bolted on.
Legal and regulatory responsibilities
As insurance becomes a strategic resilience tool, legal counsel must also be embedded in both preparation and response. The legal aftermath of a cyber incident is complex, with obligations that vary by breach type and jurisdiction.
These can include regulatory notifications under UK GDPR, sector-specific rules, contractual duties to suppliers and customers and compliance with standards like PCI-DSS. Companies may also need to engage national bodies such as the NCSC or law enforcement.
A top priority early on is preserving confidentiality and legal privilege – essential for protecting sensitive communications and managing liability. Coordinating messaging across regulators, customers, partners and media must be done with care to avoid further legal or reputational risk.
The role of legal counsel in incident response
Involving legal counsel early, ideally at the planning stage rather than post-breach, is critical. Legal input helps ensure incident response plans are robust, compliant and designed to preserve privilege to the fullest extent possible. When a breach occurs, having counsel already embedded in the process enables faster, more decisive action and avoids confusion about roles and responsibilities.
As threat actors become more sophisticated, having legal counsel integrated into cyber response teams is no longer optional – it’s essential to navigating this evolving landscape with speed, compliance and confidence.
For regulated sectors or those managing sensitive data, legal oversight also helps ensure that ransom negotiations, if considered, are conducted in a way that complies with relevant sanctions and does not inadvertently create additional liabilities.
Growing threats and adaptive defences
The cyber threat landscape is in constant flux. Attackers are increasingly deploying AI to bypass traditional security controls and identify vulnerabilities at scale. In response, organisations and insurers are using AI defensively to detect anomalies, triage threats and investigate breaches more efficiently.
But while tools and tactics evolve, some risks remain stubbornly persistent. Human error, whether through phishing, poor password hygiene or misconfiguration, continues to cause incidents. This makes employee awareness and training as essential as any firewall or endpoint detection system.
True resilience demands more than technology. It requires integrated governance – with legal, insurance and operational leaders working together at board level. Cyber insurance and legal counsel are no longer reactive supports; they are proactive enablers of strategic resilience. The organisations that recognise this will be best placed to face what’s next.
