Cyber incidents can threaten your bottom line and your company’s reputation. Cyber insurance can help you recover.
Is your company prepared for a ransomware event or data breach? It doesn’t matter how big or small your company is; it doesn’t matter what industry you’re in – if you use computer systems or the internet to conduct any of your business operations, you have cyber risks.
Good cybersecurity practices will help you minimize your risks, but new threats are always emerging. It’s a never-ending game of Whac-A-Mole – and one wrong move could be devastating for your company. Cyber insurance provides a critical safety net.
Cyber Risks for Public Companies
Cybercriminals don’t just target large corporations – smaller companies are often attractive targets because they often lack the more sophisticated cybersecurity measures of larger companies. They also tend to lack the resources needed to recover from a cyber event.
Microcap companies that are preparing to go public may be particularly vulnerable. Your business is attracting attention – but it could attract the attention of hackers as well as investors. With so much going on, it’s easy for hackers to take advantage of the chaos with social engineering schemes. And if a cyberattack succeeds, it could derail your company’s plans.
Cyber incidents take many forms, including:
- Ransomware
- Data breaches
- Phishing attacks
- Business email compromise attacks
- Denial-of-service attacks
- Vendor outages
How Cyber Coverage Can Help Protect Your Business
Cyber insurance provides coverage for cyber losses. With computer systems becoming an increasingly integral part of business, maintaining cyber insurance is as vital as property insurance or auto insurance.
With cyber insurance, you:
- Prevent cyber incidents. Many cyber insurers provide risk management resources to help businesses improve their cybersecurity and avoid losses.
- Expedite your recovery. If a cyber incident occurs, your insurer will provide resources to help you minimize the losses, comply with regulations, and investigate the cause.
- Minimize your financial loss. Cyber incidents are often costly. With cyber insurance, businesses transfer this financial risk.
Key Cyber Policy Features
Cyber insurance policies vary, but they may provide coverage for:
- Cyber extortion
- Data breaches
- Social engineering
- Business interruption
- Contingent business interruption
- Forensic investigations
- Regulatory compliance
- Data recovery
- Computer system repairs
Frequently Asked Questions
What are my company’s responsibilities after a data breach?
After a data breach, your company will need to comply with state data breach notification laws. This typically involves notifying affected individuals of the breach within a certain timeframe. Other requirements may include notifying a government agency and providing credit monitoring – see the applicable state laws for details. In addition to complying with state law, you will need to meet your contractual obligations with clients, vendors, and partners.
Can my company be held liable for a cyber incident?
Yes, your company can be held liable for failing to prevent a cyber incident. For example, individuals impacted by a data breach could sue your company and investors could file a D&O lawsuit against the directors and officers. Regulators could also take action, especially if the attack has exposed HIPAA-protected data. Since the stakes are high, cybersecurity should be a priority.
How can my company reduce the risk of a cyberattack?
Cybersecurity requires a continuous effort on many levels.
Many cyberattacks involve social engineering schemes, such as phishing or business email compromise attacks, which work by tricking individuals into revealing passwords, clicking malicious links, divulging sensitive information, or making wire transfers. Therefore, it’s important to educate workers in all positions on how to avoid cyberattacks.
Secure networks are also vital. Some basic steps include keeping programs up to date with the latest security patches and using antivirus, firewall, encryption, strong passwords, and multifactor authentication. Other measures include configuring your network settings with the principle of least privilege and monitoring your network for abnormalities. Businesses that lack the internal expertise needed to control their cyber risks should consider hiring a cybersecurity consultant.
Will cyber insurance cover losses caused by a vendor outage?
Whether your cyber insurance policy covers losses caused by a vendor outage depends on its terms. Some policies include contingent business interruption coverage that provides protection against supply chain disruptions and vendor outages.
Will cyber insurance cover lawsuits from clients over allegations of substandard technology services?
No, cyber insurance does not typically cover this type of professional liability. Depending on the terms of your policy, your cyber insurance may cover third-party claims stemming from a cyber incident. However, it will not cover lawsuits alleging substandard work. Tech E&O insurance provides this coverage.
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