If you run a business that has commercial interests and online interactions (as nearly all companies do these days), you might consider cyber insurance as a tool to mitigating the potential financial damage that may occur as a result of any type of breach, hack, or other fraud arising from internet communications.
Cyber insurance is a method to address the first and third party risks associated with all types of e-business, networks, and any other valuable information trafficked online. This form of insurance can potentially encompass all types of potential loss; from risks associated with privacy issues, virus transmission, or infringement on intellectual property. Virtually any type of loss or liability that can result from online interaction can be covered. This relatively new industry sprung up as a natural counterpoint to the risks assumed by interacting in an exponentially growing e-marketplace. Traditional liability insurance products do not address these types of risks. Commercial businesses operating online now assume many of the same risks of exposure as that of large data companies, publishers, and information providers. The major difference is the potentially limitless class of people and organizations that may hold your company liable in the event of a breach incident or improper exposure of their personally identifying information (PII).
In addition to the liability coverage cyber insurance provides, there is also an additional benefit of heightened awareness of threats on the part of management (who are footing the bill for the insurance) and therefore the greater level of effort towards educating employees on best practices to mitigate this type of risk. When one considers purchasing cyber insurance, the insurance issuer will require an assessment of current conditions of your network security, employee practices, and every other aspect of a company’s operation that may alter the level of risk associated with e-commerce. While this can be an annoyance, it can also be a very valuable tool. Cyber insurance companies usually make use of an independent third party to run the initial assessment. This will provide the employer with a very thorough look at their relative security, and point out where the greatest areas of risk are in their particular operation. Though none of this sounds like a whole lot of fun, I promise you that being held liable for a major breach is much less so, and is far more expensive than even the highest insurance premium.
So if you have a business that maintains a large online presence, it might be worth considering the costs and benefits of cyber insurance. For additional questions, contact the Identity Theft Resource Center at (888) 400-5530.
“Cyber insurance: What is it and why would you get it?” was written by Matt Davis. Matt is Director of Business Alliances at the Identity Theft Resource Center. We welcome you to post/reprint the above article, as written, giving credit to the author and linking back to the original posting.