28 Apr Cyberinsurance Could Help Mitigate the Costs of Data Breaches
The past few years have seen a growing number of high profile data breaches, costing the affected companies millions of dollars. Making it harder to recover from such a calamity is the loss of confidence the affected business experiences within its customer base. Most businesses have staff whose job it is to develop policies and educate employees in a variety of ways to avoid such breaches, but the sophistication of today’s cybercriminals defies the attempts of even the most prepared chief information security officer.
Insurance Policy Protection Against Cyber Attacks More Common
Many experts believe that data breaches are no longer the exception and indeed may become the norm. The reaction of a growing number of companies seems to be a plan that includes purchasing cyberinsurance policies. More than twice as many policies that protect against cyber-attacks were bought by businesses in 2014 as compared to previous years. Protecting against cyber damage should be and is becoming part of many companies’ overall risk-management strategies.
PCI Compliance Does Not Appear To Be Enough
Even companies who have worked hard on implementing all the Payment Card Industry (PCI) standards can find themselves dealing with breaches that range from the minor to the major. No matter how diligently they attempt to safeguard their business with proper protocols, companies are being targeted, attacked and damaged. Insuring against these seemingly intractable issues may be the only way to protect company assets and to cover customer claims.
Common Risks That May Be Covered By Cyberinsurance
During an effective cyber-attack a number of different modalities can be adversely affected. Data can be destroyed, intellectual property stolen and services denied as well as money being stolen in a variety of ways both from the company and its customers.
In addition, a company experiencing a breach may also incur significant expenses when they respond to the incident, racking up costs that can threaten to imperil even a vigorous and well capitalized business. The investigation and any immediate remediation can be quite costly. Security-audit expenses and damages the business may need to pay to others can mount up. These costs can range from minor inconveniences to serious monetary damage, because of failure to follow industry regulations or poorly delineated security practices or internal rules that are not followed.
Reputation and Brand Injury
Damage to the reputation and brand of a company is highly likely when there is a cyberattack. The challenge for insurance professionals is what kind of compensation can remedy that type of injury and how to calculate probabilities of loss and the methods used to predict possibilities of loss and how to calculate the loss values.
Partnering With Your Cyberinsurance Company to Reduce Risk
As cyber-attacks continue to change and evolve it will become extremely important to work closely with any insurance carrier you contract with to provide coverage to shield you from exposure. Working with your insurance professionals to target areas of risk and improve security may minimize risk and earn your company a reduced premium from your carrier.