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How Can Cyber Insurance Help You Manage Your Cyber Risk Expenses.

As more and more of us spend time in the digital space, the risk of being exposed to adverse cyber experience also increases. We hear of security breaches of several large corporations and government entities, however, individuals, nonprofits, and small businesses are also susceptible to such risks and liabilities.

 

One fact that is irreputable is that technology is here to stay as it continues to advance into the very fiber of how we work, communicate, live, and interact within our environments.

 

Technology is here to stay.


Advancement in cyber connectivity, technology enable critical infrastructure, smart technology, cloud computing, and internet of things have all enabled us to push the boundaries in socioeconomic advancement, healthcare, commerce, and environmental concerns. It is thus safe to say that we will continue to stay the course of relying on technology for the foreseeable future and that brings along predictable and unpredictable risks. One of which is cyber security risk.

 

Cyber Security Risk.


In recent history, incidents such as the Kroger FTA data breach, Colonial Pipeline ransomware cyber attack, Facebook, Microsoft, Home Depot, and Target data breaches are among the few of the large corporate cyber security incidents that made the headlines. Juxtaposed by many that do not make the limelight.

 

The growth in sophistication and widespread cyber attacks make it challenging for small businesses and individuals who are equally vulnerable but ill prepared to manage the risk effectively. By nature, our curiosity and eagerness to help, can get the best of us. It is therefore not surprising that social engineering has become the leading cause of network and device compromises and the top threat to individuals and enterprises.


If you have been a victim of a cyber crime, you can report it to the Internet Crime Complaint Center. The CISA also provides secure means to report incidents, phishing attempts, malware, and vulnerabilities.


The need to manage and mitigate cyber security risk is imperative.


Evidence has shown that liabilities associated with cyber risks, financial losses, and damages from the disruption caused can be costly and present a huge financial drain to a business’ bottom line. Identifying cyber security vulnerabilities, creating a culture of risk awareness, implementing risk management measures, along with maintaining a broad cyber risk insurance can assist in managing the challenges of mitigating the risk and expenses.


Why is purchasing cyber risk insurance an important addition to maintaining a robust cyber risk management and an effective business continuity planning?

 

Insurance is certainly not a fix all solutions, however, it can help lessen the financial burden from a cyber security incident. Ten loss expenses and liabilities arising from an adverse cyber incident can include but not limited to the following:

 

  1. Lawsuits filed on behalf of affected stakeholders including class action lawsuits.

  2. Regulatory fines and penalties from states and federal regulatory bodies.

  3. Liabilities due to damages and injuries caused to others caused by the incidents.

  4. Expenses to hire experts to perform a mandatory forensic examination.

  5. Expenses to provide credit monitoring services to affected stakeholders.

  6. Liability for customers’, vendors’ and employees’ costs associated with the incident.

  7. Expenses to upgrade technology, recover lost data and resume operations.

  8. Public relations and communications expenses to restore the reputation of a business after an incident.

  9. Business interruption and extra expenses costs.

  10. Stolen funds, loss of business income, and extortion expenses.


Although every business experience and exposure is different, cyber insurance can be an important asset that will help offset the expenses that may arise in the event of cyber attacks and data security breaches.


What is Cyber Insurance?


Cyber insurance policy languages differ by the insurance companies that issue them. Some policies may have additional provisions for pre and post incident services, however; a typical cyber insurance policy provides financial protection for either or both first-party expenses and third-party liabilities.


The policy covers losses from cyber incidents such as, data breach, network security, social engineering, ransomware, fraudulent funds transfers, business interruption, privacy liability, and multimedia liability.


As the cyber security risk evolves so has the cyber policies issued by insurance companies. If you need help purchasing cyber insurance, give us a call to help you navigate the procurement process.




At Axios Risk Solutions, LLC., we help small and medium-sized enterprises, families and individuals minimize and manage their business risks through tailored risk management strategies and protect their business and assets through a variety of insurance solutions in the market. To request a quote or speak to a broker, contact us. ​



Author: Sandra Owusu-Fianko

Sandra Owusu-Fianko, is the Principal and Risk Advisor at Axios Risk Solutions, LLC. She has an extensive experience in the insurance industry and a MS degree in Enterprise Risk Management. She is passionate about finding appropriate risk management and insurance solutions for her clients.

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