August “Ask the Experts” Nigel Webb talks about Cyber Insurance – Why You Need it and How You Can Protect Your Business
25 August 2017
Cyber insurance covers the losses relating to damage to, or loss of information from, IT systems and networks. Cyber insurance is designed to support and protect your business if it experiences a data breach or is the subject of an attack by a malicious hacker that affects your computer systems.
Do I need it?
As a business of any size, it is likely you will rely on your computer infrastructure to some extent. If so, you will be exposed to the risks of business interruption, income loss, damage management and repair, and possibly reputational damage if IT equipment or systems fail or are interrupted.
A UK Government survey estimated that in 2014 81% of large corporations and 60% of small businesses suffered a cyber breach. The average cost of a cyber-security breach is £600k-£1.15m for large businesses and £65k-115k for SMEs.
More than 4,000 ransomware attacks have occurred every day since the beginning of 2016 !
What does it cover?
Cyber insurance covers the losses relating to damage to, or loss of information from, IT systems and networks. Policies generally include significant assistance with and management of the incident itself, which can be essential when faced with reputational damage or regulatory enforcement.
Generally cyber risks fall into first party and third party risks. Insurance products exist to cover either or both of these types of risk.
First-party insurance covers your business’s own assets. This may include:
- Loss or damage to digital assets such as data or software programmes
- Business interruption from network downtime
- Cyber extortion where third parties threaten to damage or release data if money is not paid to them
- Customer notification expenses when there is a legal or regulatory requirement to notify them of a security or privacy breach
- Reputational damage arising from a breach of data that results in loss of intellectual property or customers
- Theft of money or digital assets through theft of equipment or electronic theft
Third-party insurance covers the assets of others, typically your customers. This may include:
- Security and privacy breaches, and the investigation, defence costs and civil damages associated with them
- Multi-media liability, to cover investigation, defence costs and civil damages arising from defamation, breach of privacy or negligence in publication in electronic or print media
- Loss of third party data, including payment of compensation to customers for denial of access, and failure of software or systems
Managing cyber risks
As well as putting adequate insurance in place, it is important for you to manage your own cyber risks as a business. This includes:
- Evaluating first and third party risks associated with the IT systems and networks in your business
- Assessing the potential events that could cause first or third party risks to materialise
- Analysing the controls that are currently in place and whether they need further improvement
In 2014 the Government launched Cyber Essentials – a basic cyber security hygiene standard to help organisations protect themselves against common cyber attacks. Considering Cyber Essentials accreditation is a good first step in becoming cyber resilient.
If you suffer a cyber breach, having cyber insurance can make the recovery process as straightforward and rapid as possible (however it is still likely to take a number of days or weeks depending on the severity of the incident). Many insurers include technical assistance with managing a breach as part of the insurance policy.
To discuss your companies options for Cyber Insurance, call us today 01905 611951
or email firstname.lastname@example.org