By Cayman Compass Contributor Ethan Godlieb
Cyber risk today is no longer a niche concern – it is one of the fastest-growing threats to households, employees and businesses in the Cayman Islands. Simply put, cyber risk is the threat of loss or harm from a digital incident. If you use email, store data or take online payments, you are exposed.
Globally, if cybercrime were measured as an economy, it would rank third after the US and China, with damages expected to hit US$10.5 trillion in 2025. And Cayman, an international financial hub with a high density of banks, investment funds, and insurance companies, is squarely in the crosshairs. The rising tide of digital asset businesses in Cayman, including exchanges, custodians, trading platforms, blockchain analytics firms, exchange-traded funds structures, real world asset platforms and wallet providers, all have evolving and significant cybersecurity needs.
IBM’s latest “Cost of a Data Breach Report” highlights financial institutions as the second most at-risk sector worldwide, behind health care. On average, the cost of a data breach for firms in financial services costs $5.56 million, not just in lost revenue, but also in remediation, fines and reputational damage.
In Cayman, the stakes are even higher. The Data Protection Act requires strict handling of personal data. A breach of the act can result in fines and potential imprisonment. In addition, for institutions built on trust and confidentiality, reputational damage may prove costlier than fines.
Yet it is not only financial institutions at risk. According to cyber insurance provider CFC Underwriting, 96% of cyberattacks are directed at small and mid-sized firms, often because criminals follow the “lowest hanging fruit” strategy. For Cayman’s many small businesses, cyber resilience is as critical as it is for banks.
The rapid uptake of artificial intelligence tools, including large language models, has added a new dimension to cyber risk. While AI can help defend against threats, it is increasingly being exploited by attackers to generate sophisticated phishing campaigns, deepfakes and automated exploits.
The IBM report notes that Shadow AI – the use of AI tools without approval or oversight – was responsible for one in five breaches.
In practice, this means employees might be pasting sensitive client data into unsecured AI platforms, or using unapproved tools to speed up work, without realising they are creating an unmonitored security blind spot. Without strong AI governance, companies expose themselves to both compliance failures and new attack surfaces.
The average breach takes months to uncover. During that time, attackers may be stealing data, damaging systems or preparing a ransom demand. Cyber insurance is not just about paying claims, it provides immediate access to specialist support: forensic investigators, legal counsel, crisis communications and system recovery experts. This support can be the difference between survival and collapse.
The lesson for Cayman is clear: Cyber risk is evolving, and traditional protections are no longer enough. Strong governance, especially around AI, and a robust insurance strategy that ensures affirmative AI coverage is included within cyber policy wording, are now essential for resilience.
The best step for businesses and individuals alike is to speak to a specialist broker in Cayman with deep expertise in cyber insurance and financial services. By working with a broker who understands both the regulatory environment and the island’s unique business landscape, organisations and individuals can secure coverage that is both effective and future-proof.
Ethan Godlieb is associate partner specialising in cyber, tech and fintech at Consilium Insurance Brokers
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