Tuesday, May 24, 2016

Understanding Cyber Risk Insurance

A data breach can bring your business to its knees overnight. Ask any cyber security professional and you will be told that there is no such thing as 100% security, as Sony Pictures knows. Obviously protecting your data is vital, but if it is hacked, what do you do next? You plug the holes and improve your defenses. But the damage has been done and it could break you. Your only protection against the financial loss is to transfer the risk. And that can be done through Cyber Liability Insurance Cover (CLIC).

CLIC Coverage

CLIC is a wide ranging term that includes a variety of options. Among them are:
  • Data Breach and Privacy Risk Management: This will cover the costs of managing the breach such as investigating the cause / source, fixing the problem, data subject notification, call management, checking credit for data subjects, regulatory fines and legal costs.
  • Extortion Cover: In other words coverage of any losses due to extortion and any fees for professional services to deal with the issue.
  • Liability for Network Security: This includes third party damages for issues like denial of access, costs related to third party suppliers and expenses due to theft of data on third party systems.
  • Media and Multimedia Liability: This will cover costs related to issues like infringement of intellectual property, defacement of websites and so on.
In some cases CLIC can overlap existing insurance coverage, in part or whole. An insurance professional will be able to advise you on what you are already covered against and what more you need.

CLIC coverage can range from highly complex policies that provide coverage against a huge range of possibilities to simple policies specially created for small and medium industries. Here too, the guidance of your insurance agent will be invaluable in choosing what is right for you.

Postponing Coverage Is Unwise

Almost all states have mandatory data breach notifications requirements. This in itself can be hugely expensive. Additionally as the sophistication of the tools used to breach security becomes more sophisticated and the expenses involved become increasingly large, the risk is not something that a business can afford to carry on its own. Protecting your business with CLIC is essential.

The tribe of malicious hackers continues to grow and data breaches are becoming more common. Cyber security is essential, but it is often reactive rather than proactive. Hackers are intelligent and creative and are constantly finding new ways to penetrate security defenses. Major multinationals spend millions on protecting their data. However, they still suffer losses regularly, due to security breaches and this news hits the headlines.

Small and medium businesses may offer smaller rewards to criminals, but they are also easier targets because they do not have huge security budgets. Cyber risk insurance is no longer an option – it is essential for any business that stores sensitive data. The potential losses could destroy your business. If you are not covered or want to check if the protection you have is enough, contact your insurance broker who will be able to advise you on what you need to do.

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