Technology offers businesses of all sizes the chance to grow and thrive like never before. Between communications, social media, and eCommerce and transaction technologies, the internet has become the touchstone for the way modern organizations conduct business operations and customer service.
With the myriad benefits technology provides businesses, there are also many cyber risks. Even the most diligent IT teams must consider risks that they miss or that are out of their control, at least to some degree. The January 2019 Medium article entitled “The Market for Cyber-Insurance Is Growing” cites a 2018 survey conducted by KPMG and Harvey Nash that found that only one-fifth of IT leaders thought their firm was well prepared for an attack. (3)
All industries are vulnerable to cyber crimes, but the healthcare and business industries are inordinately more likely to encounter a breach.
The healthcare/medical industry is a prime target with 93% of healthcare organizations reporting that they have experienced a data breach.
What Is Cyber Insurance?
Also referred to as cyber risk insurance, cyber insurance is a special type of insurance policy developed to help organizations mitigate risk exposure. A cyber insurance policy offsets any costs involved with the recovery phase after the discovery of a cyber-related security breach.
The roots of cyber insurance go back to errors and omissions (E&O) insurance, another type of professional liability insurance to mitigate risks associated with claims of negligence against the business. (6) As business technology capabilities increased, cyber insurance started to catch on in the mid-2000s. PWC notes that about one-third of U.S. businesses buy some type of cyber risk insurance.
What Does Cyber Insurance Cover?
The fallout from cyber crimes can be extensive, and cyber insurance can help businesses with the following tasks:
- Costs, fines, fees, ransoms, and loss of revue due to harm to reputation associated with a cyber breach.
- Customer notification of breach, PR and crisis/brand management.
- Customer service representatives to field calls and concerns from customers.
- Credit monitoring to protect affected customers.
- Breach investigation and report.
Cybersecurity risks are tricky to predict, and most businesses can’t set aside a budget to account for the effects of a data breach.
Do You Need Cyber Insurance for Your Business?
If you are doing business over the internet, you probably need to consider investing in cyber risk insurance. Businesses of all sizes face some degree of risk, and cybersecurity insurance helps you assess your specific risks and put a monetary value on them.