Cyber attacks are becoming more and more common, and they can be incredibly costly. If you haven’t already, you should consider getting a cyber risk insurance policy, regardless of the size of your company. In fact, in many cases companies are required to carry some level of cyber risk insurance prior to engaging in business with other entities.
In fact, small businesses are approximately three times more likely to be victims of cyber attacks than larger companies, and that 60% of those businesses will go out of business within 6 months of an attack.
The reality is, however, that cyber crime targeted toward businesses in general is on the rise, and many businesses may not survive a substantial attack. Cyber risk insurance is a smart way to protect your business, and it can give you peace of mind knowing that you’re prepared and financially protected in the event of an attack.
There are several important elements to determine when considering purchasing a cyber risk insurance policy, including evaluating a policy’s coverage, assessing your risk, and calculating the appropriate amount of coverage.
Evaluating a Policy’s Coverage
There are a lot of different types of insurance policies out there, and it can be hard to keep track of them all. Cyber risk insurance policies are designed to protect businesses from the financial losses that can result from a data breach or cyber attack. These policies can help cover the costs of things like litigation, data recovery, and business interruption.
When it comes to cyber risk insurance policies, there is a lot of variation in what is covered. It is important to understand what each policy covers and does not cover in order to make the best decision for your business.
Cyber insurance policies typically cover three main areas: first-party losses, third-party losses, and cybercrime losses.
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First-party losses are when your own business suffers a loss due to a cyber event, such as data breach or a system outage.
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Third-party losses are when another business or individual suffers a loss due to your business’s negligence, such as if you unwittingly transmit a virus to their systems.
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Cybercrime losses are when your business suffers a loss due to criminal activity, such as fraud or hacking.
Some policies will cover data breaches, while others will only cover malicious attacks. Some policies will cover the costs of restoring damaged data, while others will only cover the costs of litigation.
Most cyber risk insurance policies will cover the costs of investigating and repairing a data breach. This can include the cost of hiring a forensic investigator, as well as the cost of notifying affected individuals. Many policies will also cover the cost of litigation, should you be sued as a result of a data breach. However, not all policies will cover these costs.
Assessing Your Risk
In order to know what type and range of coverage you need, it’s important to assess the current safeguards you employ and examine what risk factors may be exposing you to greater likelihood of being targeted by cyber criminals.
There are a number of factors that can reduce your risk, and it’s important to be aware of them so you can take steps to patch any vulnerabilities in your current system. Some of the factors that can increase your risk of being attacked include having outdated software, using weak passwords, and a lack of training for employees regarding the signs of phishing scams and ransomware attacks.
Additionally, if you have a lot of confidential information stored online (e.g., customer data), or if you conduct many financial transactions online, you may be at a higher risk of being attacked. There are a number of ways you can assess your risk of being attacked. One way is to use a cybersecurity risk assessment tool, such as hiring a reputable third party (e.g., Socium Solutions) to conduct an assessment.
This assessment could serve a dual purpose. It will aid you in learning how to prepare for a cyber attack by showing potential gaps and flaws in your current cyber security while also serving as a component of your application for cyber risk insurance, as many insurance companies require such an assessment as part of the application process.
Calculating the Appropriate Amount of Coverage
When most people think of insurance, they think of insurance for their homes, cars, or health. However, there is a growing market for cyber risk insurance. In fact, cyber risk insurance is currently the fastest growing product in the property and casualty insurance industry.
Many factors affect the cost of cyber risk insurance premiums and the amount of coverage provided, including the size of the business, the industry the business is in, and the level of risk the business faces.
While complete cyber risk insurance coverage may seem like an optional expense, it may soon become a necessary one. Gartner, Inc., a technological research and consulting firm, estimates that “by 2025, 60% of organizations will use cybersecurity risk as a primary determinant in conducting third-party transactions and business engagements.”
To conclude, a cyber risk insurance policy can help cover the costs associated with a data breach, cyber attack, or other cyber-related event. But it’s important to remember that no insurance policy can completely protect you from all cyber risks. That’s why it’s also crucial to take steps to prevent cyber attacks and reduce your exposure to cyber risks. By taking these steps, you can help decrease the chances that you’ll need to file a claim on your cyber risk insurance policy.
If you need assistance in assessing your cyber security risk or plugging the holes in your current cyber security systems, Socium Solutions can help. Let’s work together to ensure that your data is safe, your network is secure, and your people are savvy enough to recognize potential scams. Contact us today to learn more about how to protect your business from cyber criminals.