Here are 10 reasons your clients may need cyber insurance.
Business may grind to a halt
With most organisations heavily reliant on technology to conduct everyday business, inaccessibility of IT systems due to a cyber attack or data breach can result in severe business interruption to both first and third parties. A comprehensive cyber insurance policy will include cover for loss of profits, internal errors and unexpected technical failures.
A cyber attack can be costly
In addition to ‘surface’ costs (customer breach notifications, regulatory compliance fines and technical investigation costs), organisations may also incur less visible costs, such as lost contract revenue or loss of intellectual property, for which a cyber policy may offer cover. The average cost of UK cyber crime increased by 31% between 2017 and
20181, costing the UK economy around £11bn.
People make mistakes
More than a fifth of data breaches occur as a result of human error or negligence², such as loss of a device or a stolen laptop containing sensitive data. Other examples include employees using personal USB sticks or clicking links within SPAM emails.
An employee for a company left a laptop on a bus. The files on the computer contained sensitive customer data. Action had to be taken quickly to ascertain what happened. The client was guided through the security breach process, action protocols were created, and specialist IT companies were mobilised along with PR consultants. The client’s customers felt the matter was dealt with well, and no further issues arose. As a result, no third party claims were made.
A ransom email was sent to a company advising that a denial of service attack (DDoS) was imminent. There was a demand for payment to be made otherwise the DDoS attack would be set in motion and the client would be locked from using their systems. A cyber response coach cooperated with IT professionals and Government authorities to prevent the attack. Also, IT specialists isolated any impact ensuring no loss was caused, and Government authorities were able to trace the attacker and prevent other attacks from occurring.
Regulators can levy hefty fines
With increasing focus on data protection regulation, such as GDPR, cyber insurance may include cover against defence costs, fines and penalties following unauthorised disclosure of personal and/ or confidential information.
A company's reputation may be damaged
Where a company’s reputation is threatened following an attack or breach, a comprehensive cyber policy will cover the cost of a consultant to help minimise damage to reputation and brand.
06 Computer insurance alone won't cover lost data
Computer insurance may cover damage to hardware but not software. A reputable cyber insurance policy will cover costs required to restore data system functionality and lost data, helping to get systems and networks back up and running swiftly.
Any business can be a target
Cyber criminals don’t discriminate by company size or type. In 2018, 31% of micro and small businesses and 61% of large firms identified breaches or attacks3. Therefore any business which stores digital data can be at risk of an attack or data breach.
Acting fast is key
Cyber insurance may include cover to pay for forensic experts to identify, contain and remove the threat. The sooner this is done the better. Ponemon Institute research4 reported that companies which contained a breach in fewer than 30 days saved over $1 million as compared to those that took more than 30 days to resolve the incident.
Cyber insurance reassures third parties
Taking out cyber insurance can send a clear message to customers and suppliers that a company takes IT security seriously and has protection in place to manage an incident in the event of a breach. This assurance can be a selling point for companies looking to qualify for bids and tenders.
Cyber crime is increasing
The most common fraud in the UK in 2018 was cyber crime⁵ and cyber incidents topped the Allianz Risk Barometer 2019 as a key corporate peril for UK businesses. Generally, cyber attacks are on the increase6 so it’s more important than ever for companies to take measures to protect themselves. Cyber insurance can offer such protection, in combination with robust risk management strategies.
1. Accenture & Ponemon Institute (2019). The Cost of Cyber Crime: Ninth Annual Cost of Cybercrime Study. - view source
2. Ponemon Institute. 2018 Cost of a Data Breach Study: Global Overview. July 2018.
3. GOV.UK - Cyber Security Breaches Survey 2019. view source
4. 2018 Cost of a Data Breach Study: Global Overview. Ponemon Institute.
5. PwC’s Global Economic Crime Survey 2018: UK Findings. 2018.
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