Who needs cyber liability insurance?
Cyber insurance is the most important type of insurance in 2017 because cyber risk is the biggest threat to businesses, to protect the information that you hold and your technology assets.
It’s an operational risk that has emerged from conducting business in a technologically advanced environment. We are more connected today than ever before with the internet, with Internet of Things, with cloud-based computing, and digitization.
As a result, that means cyber criminals have more entry points to our systems. Once a hacker gains access to your system, you are at their mercy. Sometimes you know about it straight away as in the case with ransomware and sometimes you don’t know. Microsoft reports that viruses can sit in your computer undetected for up to 300 days. So they sit in the background quietly, stealing your information.
We’ve all heard about the headline attacks on Sony, Adobe, Telstra and Target, but I’m going to focus on SMEs today, and that’s a small to medium businesses because they are the ones that are at most risk. Sixty percent of attacks are on SME businesses because they lack the security, training, and just general risk management procedures, which makes them vulnerable to cyber criminals. And unfortunately, some businesses don’t recover from these attacks.
What does a typical cyber security compromise cost a business?
A cyber attack on a small business with a turn over of less than $5 million can cause up to $60,000. When I raise a topic of cyber insurance with my clients, I’m often met with a response that, “We have great IT guys, we don’t need the insurance.” But this is not an IT problem.
A cyber attacks affects the whole business. And depending on what industry you’re in, what information is stolen, how long your systems are down for, it can cost a lot.
I’d also like to make the point that a data breach instant can be caused by an employee. I’d also like to make the point that a data breach can be caused by an employee, and by data breach, we mean disclosure of sensitive and personal information, so information like health records, tax file numbers, names, and addresses, phone numbers. Employees have been known to publish this type of information on company websites or medical records found dumped in rubbish bins.
Employees are responsible for 29% of data breaches, and this comes at a cost to businesses. A cyber insurance policy will help you in two ways. Firstly, it will give you access to a incident response team. It gives you access to attain best experience in handling these matters.
Your incident response manager will deploy consultants, such as an IT forensic consultant or lawyers or a public relations consultant to help you deal with the matter and get your business up and running again. Secondly, it covers the cost of the consultants.
It will also cover other costs, such as cyber extortion, the ransom that the hackers are asking for. It may cover public relation cost to manage your business’s reputation. If credit card data is stolen, it will cover credit monitoring services, and it will also cover notification costs. So you need to notify customers if their data has been stolen. So to just to wrap it up, cyber insurance is the most important insurance to have in 2017 because cyber risk is emerging as the number one threat to businesses.