With the rapid increase in information technology, social media, and digital transactions, organizations are unknowingly exposed to various cyber-attacks. They can range from identity theft, malware attack, and phishing to misuse of critical business information. New strategies are devised every day by attackers to take advantage of any vulnerability in the IT infrastructure of a company. 2018 has already witnessed the devastating consequences of security flaws in network and servers. Incidents include Facebook data theft, British Airways data breach and Google + bugs resulting in complete shutting down of its consumer operations.
A single flaw in your network can open gates to a security disaster. To give you a greater idea of the devastating effects of a cybercrime, the following points highlights the business consequences of a cyber-attack:
- Serious Downtimes: Attackers may render your servers and network completely inaccessible for genuine users by performing a Denial of Service (DoS) attack.
- Data loss: Viruses and attackers with access to your data center can delete crucial business information collected over years of hard work.
- Business Reputation: With a cyber-attack on the door causing service unavailability can you’re your business reputation. Moreover, a ransomware attack can result in thousands of dollars in extortion which at worst can result in a complete shutdown of your services.
It is extremely necessary to understand such new-age risk factors and their impact on your business. Therefore, as part of a risk management, organizations must decide a contingency plan for transferring risk. This is where cyber insurance coverage comes into play.
Mitigating Risks with Cyber Insurance
Cyber insurance is insurance for businesses and individuals against internet-based risks. Cyber insurance products mitigate the potentially devastating effects of cybercrimes such as malware, distributed denial-of-service (DDoS) attacks, or any other method used to compromise a network. They offset costs involved with recovering after a cyber-related security breach or similar event in organizations.
What Does a Cyber Insurance Cover?
IT has become the lifeline of companies. But with inefficiencies of current hardware, software and cryptographic methodologies against cyber-attacks, companies need to cover massive expenses after a disaster. Although there is no standard for underwriting cyber insurance policies, cyber insurance products include the following expenses:
- Investigation: The first thing that is required in the event of a cyber-attack is to investigate the vulnerabilities and origin of the attack. This is necessary to prevent and fix the flaws from future attacks. The investigation is generally carried out by third-party security firms and law enforcement authorities.
- Data breach notification: Certain compliance regulations require companies to notify consumers as well as the concerned authorities about the data breach. A cyber insurance cover all the expenses incurred in documentation and notification including the costs of transportation to court and photocopying of documents.
- Remediation: A part of a risk management plan involves repairing reputation damage. A cyber insurance policy may include restoration costs of the Insured’s computer system due to damage caused by Malware and other cyber-attacks. The monetary losses experienced by network downtime, business interruption, data loss recovery, and crisis management charges are included in it.
- Legal costs: With the growing cybercrimes, legal authorities in certain countries charge penalties against companies that fail to secure public data. Cyber insurance may cover legal expenses associated with loss of intellectual property, a leak of confidential information and legal settlements.
- Extortion liability cover: The cyber insurance policy also covers the losses due to cyber extortion threats like in WannaCry ransomware. This includes prosecution costs and other fees related to dealing with the extortion.
- Media liability claims: This insurance covers the liability arising out of unauthorized publication or broadcasting of any digital content resulting out of a Cyber Attack. In short, any defacement of website and intellectual property rights infringement is coved under media liability claims.
First-Party vs Third-Party Cyber Insurance:
Cyber insurance companies not only offer a standalone policy for your business but also offer coverage as add-ons to a business’s third-party cyber liabilities.
- First-Party Cyber Insurance: This cyber insurance covers reimbursements for financial losses due to data breach and other cyber-attacks on your company.
- Third-Party Cyber Insurance: This covers your customers, vendors, and any third-party companies that provide certain IT services to you. The majority of the claim cost covers legal charges, judgments, and settlements out of court.
How Much Does It Cost?
The cost of cyber insurance varies among insurance providers. But the average charges apply as follows:
- Annual premiums for small companies average around $1,000 for $1 million coverage.
- $7,500 or more for mid-sized businesses depending on the revenue and the number of client records.
- Larger firms may see costs as high as $40k per year
It is to be noted that the coverage costs will vary depending upon certain factors including industry type, coverage limits, and network security.
As your business will grow, the risk of cyber-attacks will grow as well. Without efficient computer security solutions, there will be a growth of vulnerable endpoints ultimately resulting in a security disaster. Therefore, you should not wait for an attack for deciding to adopt new standards in the IT infrastructure of your organization. You should consider investing in cyber insurance and secure yourself from any revenue loss caused by downtime. A third-party service that is expert in the cyber domain can help you out in strategizing your business against cybercrimes.