If you have been paying attention to the news this last week you’ve heard about the massive cyber attack that has spread across the world, locking up computers in many, many countries with no clear end in sight, in what is being called the biggest hack of its kind ever recorded. So far these attacks have largely hit businesses and large organizations and it’s expected to continue to cause more problems this week as the ransomware (a type of malicious software that takes over a computer and locks the user out) continues to spread to over 150 countries worldwide.
So, what can you do to protect yourself and your business financially when a cyber attack of this nature occurs? Any business that uses technology or collects data is at risk of a cyber attack, and the results can be catastrophic—one study suggests the average cost to rectify a data breach is now $7 million*. Without securing a dedicated cyber policy, most businesses likely do not have adequate insurance coverage following a data breach.
Cyber insurance can be essential in helping your company recover after a data breach, with costs that can include business disruption, revenue loss, equipment damages, legal fees, public relations expenses, forensic analysis and costs associated with legally mandated notifications. A lesser-known benefit of cyber insurance is the role it can play in protecting your company long before a breach occurs.
We want to help our clients avoid a data breach in the first place. While that’s not always possible, by connecting clients to cyber resources through our carriers they can learn about cyber risks, data security best practices and incident response planning. This will help companies and individuals prepare themselves to better respond to and withstand a data breach.”
For example, our carriers encourage companies to create, implement and test a business continuity plan and an incident response plan. Also, companies should consider having a secondary system available for online access and ensure this system is tested regularly for functionality. Implementing an intrusion detection system on your network can help companies respond to attacks sooner.
Following are some ways that cyber insurance can provide coverage:
Companies are responsible for their online data, no matter where it is stored. Whether it is stored on your property, in an offsite data warehouse or in a third-party technology company cloud, you may be held liable if any personally identifiable information (PII) or protected health information (PHI) gets exposed.
To help protect your company’s data, cyber professionals recommend you understand where all of your private or confidential information is stored. Create and test policies and procedures concerning the collection and storage of data, and have a document retention procedure in place to ensure you avoid keeping data you do not need.
If a breach does occur, a cyber policy can cover breach notifications and remediation expenses, subject to the applicable retention. It also can cover defense expenses such as responding to and cooperating with regulatory investigators.
Today’s mobile workforce means that laptops and other mobile devices often leave the workplace premises and may be stolen or compromised, potentially exposing private or confidential data. While you cannot completely prevent theft or loss, your organization can take steps to protect and limit the amount of data on each device, such as implementing procedures for using effective passwords and mandating periodic changes. Avoid storing any private or confidential data on laptops. Or, if necessary, store only encrypted data or access it via a secure connection to a server.
If a breach does occur, a cyber policy can include Network and Information Security Liability coverage, which provides protection for failure to prevent unauthorized access to, or use of, data containing private or confidential information of others. The costs for a single lost laptop can include more than just the cost of the device, such as legal costs, investigation and miscellaneous expenses.
Notifying customers of a breach and other post-breach responses, which is mandated by law, can add up, averaging $1.72 million according to one survey of U.S. businesses.* As part of the a cyber policy, the carrier would refer the customer to a law firm to serve as counsel and breach coach and help reimburse those costs, subject to the applicable retention. An incident breach response vendor would also be recommended to handle customer notifications, in keeping with state laws when personal information is compromised.
Computer forensics teams can determine the extent of a breach and whether private customer information may have been compromised. A Travelers cyber policy would reimburse the insured, subject to applicable retention, for computer forensic experts. The policy also could provide coverage for potential business loss and extra expenses that may occur during the period of business restoration.
Cyber liability policy customers have access to risk management services, cyber security experts and other resources to help prevent a data breach. Having cyber insurance can help prepare your company to respond effectively in the critical hours and days following a data breach. Please contact our office if you would like to speak to one of our experienced insurance professionals to get more information about a cyber liability policy or to learn how you can further protect your business from financial ruin through a well-placed insurance program.