Bahar Ferguson
Today’s businesses face a lot of risks. There are the traditional risks such as fires, floods and theft. Then there are the more modern risks, such as cyberattacks. Cyberattacks are a growing concern for businesses of all sizes. They can come in many different forms, from viruses and malware to phishing scams and denial-of-service attacks. And they can have damaging consequences, ranging from the loss of sensitive data to the disruption of critical operations.{mprestriction ids="1,3"}
Despite the risks, there are several things that businesses can do to protect themselves. One of the most important is to invest in cyber insurance.
In this article, we’ll look at what cyber insurance is and why it’s so important. We’ll also explore some of the different components of cyber insurance, how they work together to protect organizations from attacks and what businesses can do to find the right solution for their needs.
What is Cyber Insurance
Cyber insurance is a type of insurance that helps businesses recover from the various costs associated with a cyberattack. This can include the cost of repairing damage to systems, replacing lost data and providing crisis management services. It can also cover the cost of lawsuits and other legal fees that may arise from a cyberattack.
There are several different types of cyber insurance policies available and businesses should carefully consider their needs before selecting a policy. Like with any type of insurance that individuals purchase some policies may cover only certain items while others may provide more comprehensive coverage. When choosing a policy, a company should look at what type of attacks would be most detrimental to them and their users and make sure that is what the plan covers.
Once a company has identified what type of cyber insurance is the best fit, it then it will be protected monetarily from any unfortunate costs that may accrue from a cyberattack.
Without coverage, they’re left to deal with the damaging fallout of a successful attack on their own, which can include:
Data Loss. One of the most common risks of a cyberattack is data loss. This can happen when an attacker gains access to an organization’s systems and deletes or encrypts important data. Data loss can be devastating for an organization and it can be very difficult to recover from.
Downtime. Another common risk of a cyberattack is downtime. This is when an organization’s systems are unavailable because of an attack. Downtime can be caused by many different things, from network disruptions to server failures. It can be very costly for an organization and it can cause a loss of productivity.
Reputational Damage. Another risk of a cyberattack is reputational damage. This can happen if sensitive data is leaked or if the organization is seen as being unresponsive to the attack. Reputational damage can be difficult to recover from as it may lead to loss of customers, as well as a loss of trust from the public.
Financial Losses. Another common risk of a cyberattack is financial loss. An organization can lose money from an attack in a plethora of ways because of an attack. They may have to pay for damage control, they may lose customers or they may have to pay ransom to get their data back. In some cases, the financial loss can be so severe that it leads to bankruptcy.
Legal Liability. Organizations can also face legal liability because of a cyberattack. If an attack results in the loss of customer data, the organization may be liable for damages. In some cases, organizations may also be held responsible for negligence if they did not take adequate steps to protect their systems.
The Growing Risks and Damages of Cyberattacks
As technology becomes more and more ingrained into society’s fabric, the risks and damages associated with cyberattacks are also growing. In 2017, global cybercrime damages are estimated to have reached $600 billion, which is up from $445 billion in 2014. Technology website Tech Xplore estimated the worldwide cost in 2021 at $6 trillion. This number is only expected to further grow in the coming years, as the number of connected devices and sensitive data increases.
While the financial cost of cybercrime is significant, the non-monetary damages can be just as severe. There have been several high-profile cyberattacks in recent years that have resulted in the loss of sensitive data, such as customer credit card information or medical records. Prominent examples include the Equifax breach, which exposed the personal information of over 143 million people, and the WannaCry ransomware attack, which impacted over 200,000 organizations in 150 countries.
Cyber Insurance: Your Best Defense Against Cyberattacks
Despite the growing risks and damages associated with cyberattacks, there are a number of things that organizations can do to protect themselves. The first is to hire an IT outsourcing partner to come in and identify potential security threats and make sure all of a company’s secure information is, in fact, secure. However, if an attack happens before a company is able to hire a strong IT team or an attack happens before the company has an opportunity to do a deep dive into security, cyber insurance is a great measure of protection.
Cyber insurance is made up of several different components, all of which work together to create a comprehensive barrier of protection that can help organizations mitigate their vulnerability to attacks. The following is an explanation of each and what they involve:
Crisis Management Support. One of the key components of cyber insurance is crisis management support. This is a service that helps organizations deal with the aftermath of an attack and it can be incredibly helpful in mitigating the damage. Crisis management support can help organizations pay for damage control, as well as provide public relations and legal assistance.
Data Breach Coverage. Another important component of cyber insurance is data breach coverage. This type of coverage can help organizations cover the costs associated with a data breach, such as notifying customers, providing credit monitoring services and paying for legal fees.
Business Interruption Coverage. Another key element of cyber insurance is business interruption coverage. This type of coverage can help organizations cover the costs associated with lost revenue as a result of a cyberattack. This can be particularly helpful for small businesses which may not have the financial resources to weather a significant loss.
Cyber Extortion Coverage. Cyber extortion coverage refers to insurance that covers the costs associated with cyber extortion, which is when an attacker demands money in exchange for not releasing sensitive data. This type of coverage can help organizations pay the ransom and prevent the release of sensitive information.
Forensic Expenses Coverage. Forensic expenses coverage helps organizations cover the costs associated with hiring a forensic team to investigate a cyberattack. This can be important to determine the extent of the damage and identify the attacker.
Litigation Expenses Coverage. Another important component of cyber insurance is litigation expenses coverage. This type of coverage can help organizations cover the costs associated with legal action that may be taken because of a cyberattack.
The Benefits of Cyber Insurance
Cyber insurance isn’t a one-size-fits-all service and depending on a company’s size, desires, area of work and implied security threat, they may not need all the bells and whistles that come with having forensic and litigation expenses coverage. However, every company can benefit from the financial protection, peace of mind, risk management, preparation, improved cybersecurity and having a place to call if an attack happens and they don’t know the next steps.
Cyberattacks are becoming more common and the damages they can cause are increasing. While there are many different steps that organizations can take to improve their cybersecurity, investing in insurance is one of the most important. By doing so, organizations can significantly reduce their risk of being attacked and improve their chances of recovering if they ever are.
Bahar Ferguson is the president of Wasatch I.T., an IT service for small and mid-sized businesses in Utah.{/mprestriction}
