Why Cyber Liability insurance is important in today’s business world
If you think Cyber Liability insurance* is an extra expense your business doesn’t need, you might want to think again.
Take a moment to consider how important data is to your business, it is possibly one of your most important assets.In fact, it’s probably worth significantly more than the equipment on which it is stored. . , In the event of a data loss, you could be subjected to crippling financial outcomes, something that no small business owner wants to have to worry about
If you’re serious about insuring your business, you should consider having solid Cyber Liability insurance in place that offers comprehensive cyber risk coverage.
Many businesses think their business is too small to attract cyber criminals. Yet, when it comes to cyber theft, size doesn’t matter. Hackers are on the lookout for businesses of any size with valuable customer data they can steal and sell on the black market. Businesses are increasingly vulnerable to cyber-attacks.
Consider some of the most high profile cyber attacks in recent times that targeted major brands. In the case of eBay, hackers managed to steal personal records of 233 million users. The hack saw usernames, passwords, phone numbers and physical addresses compromised. Fortunately financial information was stored separately and not stolen but this still left eBay users vulnerable to identity theft and brought risk to eBay’s reputation.
Big businesses are obvious targets of hackers and cyber criminals, right? After all they have big pockets to pay ransom demands. But in fact small business is just as vulnerable to cyber crime, with over 108 cyber attacks in New Zealand during 2016. In New Zealand, there is no law requiring that breaches be declared so the numbers might be bigger.
So why are hackers interested in small business? To start small business websites are often used as “watering holes” or loopholes to break down the security of other businesses. (i.e. get into the systems of other businesses). They are also an easy target for sophisticated hackers as they often don’t have the security systems in place to prevent an attack, making them a target for their customer data, intellectual property and bank account information.
Take for example the small recruitment firm which, over a three year period experienced three separate instances where their systems were breached. Bank account and drivers license details of 500 on-hired contractors were stolen.
Or the Accounting firm, which had their server and client records locked by ransom ware and hackers demanded $50,000. In New Zealand, ransom ware demands costs small businesses millions of dollars per year.
But cyber risk is not just about hackers. It also covers staff who accidentally make public confidential information, insider theft as well as theft or loss of a device. Like the Australian case of the sports drug testing consultant who left his laptop at a sports ground. He was able to claim $70,000 for Business Interruption, notification costs and as defence costs for the breach of privacy.
This is why cyber insurance should be an important part of your risk management plan, as it provides protection against the expense and legal costs associated with data breaches. Having cyber can help mitigate a number of ways a business can be impacted financially:
- Brand reputation– this is likely to be one of your most import assets, so you will need to protect and potentially repair any damage.
- Interruption to business– this could include temporary downtime while the issue is investigated, lost income due to system downtime and potential loss of sales.
Having a Cyber Insurance policy can provide you cover for the following costs:
- Compensation claims
- Credit Monitoring
- Cyber Extortion
- Data Restoration
- System Repair
- Public Relations
- Business Interruption
Cyber insurance is available for first-and third-party losses, which in plain language means that if your business has customer or vendor relationships and processes customer-sensitive (non public) information, you need it.
Systems play a critical role in everyday business, but standard BusinessInterruption insurance may not provide the protection you need
Unless you’re living in the dark ages, it is likely that you rely on many different systems to run your business. From accountancy software and point of sale processing torestaurant or hotel book systems, these systems help keep your business running every day.
If these systems were to be brought down by a computer virus, hacker, or actions of an employee with a grudge, you may not be coveredby your Business Interruption policy.This is where Cyber Liability insurance provides cover.
Cybercrime is a real threat. Make sure you have the right cover in place
We live in a global, digitalised world in which businesses are at risk of cyber crime at anytime. The reality is your business could be exposed to a risk of identity theft, scams, hacking, and data loss. Cyber liability insurance provides comprehensive coverage for the various cyber risks that are lying out there.
Losing third-party data could ruin your business
The data and information you hold as a business often don’t belong to you and may belong to external sources like your suppliers, contacts, and customers. You may have signed contracts or privacy agreements that contain regulations related to your obligations to protect the data and avoid any security breaches. As such, you could face a potential claim if you experience a data breach. As a business that operates in New Zealand, make sure that you check the legal requirements when it comes to privacy and security of personal information and data so you don’t find yourself in a compromising situation.
Your risk is increased if credit card data is lost
Part of your responsibility when using merchant devices to transact with customers is to ensure their financial data is protected and secure. , If you lose data related to financial details, you could be liable for any fraud performed using the stolen cards, and not to mention the associated investigation expenses or even fines and penalties. These losses could mean the end of the road for a small retailer as they can reach hundreds of thousands of dollars. Cyber liability insurance is there to provide protection when you least expect you will need it.
Compliance with breach notification laws is expensive
As part of the breach notification laws that are in place in New Zealand, if you lose your customer or clients confidential information, you may need to contact each individual whose data has been exposed. Cyber risk insurance could cover the associated costs of such compliance.
Your reputation is at stake
As a small business you rely on having a strong brand and a positive reputation. Although there are some reputational risks you cannot protect yourself against; you can safeguard your business against a security breach.
Cyber Liability insurance is an investment in protecting your online systems, helping you stay in business for the long run.
Many organisations think they are immune from the major attacks that hit large corporations. However, small businesses are also at risk. Make sure you have solid cyber liability insurance in place to cover your business in the eventuality it is hit.
* This information is a general guide only and does not take into account your objectives, financial situation or needs. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.