Let me start off by saying, an insurance policy is a band-aid and not a solution. Cybersecurity insurance only mitigates damage arising from incidents such as data breaches, virus insertion, and reputation damage. Furthermore, it is nothing like traditional insurance due to the nature of the damage involved. Remember an ounce of prevention is worth a pound of cure.
Cybersecurity insurance is becoming increasingly common as organization’s attempt to hedge their risks against the rising tide of cyber threats. The adoption of preventive security measures is as you might expect the primary consideration in being eligible for better premiums.
Examples of questions asked when filling out insurance paperwork cover;
Insurance Transfers a Degree of Risk
Cybersecurity insurance is essentially a risk-mitigation and risk-management strategy. Nearly every available policy transfers a degree of financial risk in the event of a security breach to the insurer. Most organization’s opt to cover essentials like digital assets as well as business interruptions. Some policies also cover damage to an organization’s reputation.
Third-party insurance covers a broader amount including the costs for legal battles, regulatory fines, and credit monitoring. However, it is nigh on impossible to protect against all types of cyber-threats through insurance.
Every little word in a policy is crucial
Due to the immeasurably broad nature of cyber-threats, wording in the insurance policy takes on greater precedence. You need to know exactly what cyber security insurance covers before opting for a policy. Ensure that the policy your organization goes with, protects the most critical aspects of your infrastructure. As cyber security insurance is still a relatively nascent market, there is often a certain level of misunderstanding in relation to what is covered ad what isn’t.
Public relations and legal defense coverage
Security breaches in data and other areas of cyber damage may irreversibly alter the public’s view of a company. Once faith is lost in the ability to protect data, it cannot be easily recovered. This is why some of the most popular forms of cyber security insurance involve covering costs related to rebuilding public relations, fighting court battles over data security, and paying federal fines.
For example, the Yahoo! Data breaches of 2014 (reported in 2016) has damaged faith in the company, and scuppered the chances of its sale to Verizon. While a firm like Yahoo! can handle the various legal and public relations costs, it is impossible for smaller firms to do so without the assistance of cyber security insurance.
Cyber attacks will only increase in the future
The widespread proliferation of the Internet of Things (IoT) is leading to new types of critical cyber attacks. As the number of devices connected to the Internet increases, the number of attacks will increase. By the end of 2017 an estimated 28.5 billion devices will be connected to the Internet. This number will further rise to anywhere between 50-100 billion by 2020. The October 2016 Dyn cyber-attack affected large parts of Europe and North America, and these attacks were initiated through bonnets consisting of a large number of IoT devices such as printers and baby monitors. There is a need to greatly increase the security apparatus of all these devices in order to prepare for cyber attacks.
On the flip side, the cyber security insurance market will expand greatly over the coming years in direct response to the ever increasing amounts of devices and cyber attacks. As the market matures, we can expect to see more detailed and specialized types of cyber security insurance plans hitting the market.