Cyber Risk Insurance Washington DC: Covering Your Bases In the Event of a Cyberthreat
Key Points From Article
- Cyber risk insurance covers beyond identity theft, hacking, and cyberbullying to protect businesses from costs associated with data breaches.
- You can take first-party or third-party cyber risk insurance to rescue your business in case of cybercrime.
- However, a cyber risk insurance policy doesn’t cover intellectual property losses, self-inflicted incidents, and proactive measures.
Expensive downtime, revenue loss, drain on employee productivity, equipment damage, legal fees, public image damage, customer turnover, loss of brand equity — a successful data breach comes with a tremendous cost.
The recovery cost goes beyond technical activities, and your business needs to cushion itself against the risk of cyberattacks.
With the increasing cyber threats, the corporate world must prepare for what comes after an attack. Taking cyber risk insurance is one way to prepare your business for an attack.
What Is Cyber Risk Insurance?
Cyber risk insurance is a dedicated cyber policy with legal agreements to insure your business from cyber-attacks. Cyber insurance helps you recover from data breach-related costs such as business distraction, revenue loss, or forensic analysis costs.
The Importance of Cyber Risk Insurance to Your Business
Cyber risk insurance is essential for businesses with a high client base, variable assets, high returns, and companies that store sensitive customer data.
With cyber risk insurance, you can protect your business from:
1. Business Disruption Losses Stemming from Cyber Attacks
Cyber attacks result in costly business downtimes. Attacks interrupt business operations, which cause huge losses in terms of productivity and profits.
Cyber risk insurance will help you protect your business from losses that come with business disruption during an attack. The liability coverage protects you from incurring business disruption costs stemming from ransomware attacks, denial of service (DoS), and other malicious software that hinder business continuity.
2. Financial Losses
Cyber-related financial losses are attributed to hacking and data theft. Research indicates that data breaches force 60% of companies to close after 6 months of a cyber attack.
You don’t want to take a risk that could throw you out of business. Cyber risk insurance will help you recover from the financial losses attributed to cyber-attacks.
3. Public Relation Expenses
With proper cyber risk insurance, you can effectively handle communication with your stakeholders. Communication plays a significant role in understanding the impact of a cyber-attack and the mitigation measures.
4. Forensic Analysis
Forensic analysis helps your organization detect, investigate and document the cause of a cyber security incident.
The investigation follows a series of steps and can take time to complete. Cyber risk insurance can help you cater to the costs associated with the lengthy process.
5. Legally Mandated Notification
The law requires that the affected company notifies its customers and other stakeholders of the breach in a data breach case. The company should also follow the legal mandate to neutralize the situation.
Cyber risk insurance will cover your company from the costs associated with legal notifications.
What Does Cyber Risk Insurance Cover?
Depending on the type of cyber risk insurance cover you take, you can ensure your business from any losses arising from cyberattacks or defend yourself in a court of law.
First-Party Risks
A first-party risk insurance policy insures your business from any losses arising from a cyber incident. The insurance can cover:
1. Business Downtime Losses
Ransomware attacks, a denial of service, or a network misconfiguration may result in business downtime. A first-party risk cover will help you recover from the losses associated with such cyber threats.
The policy will cover lost profits and any costs resulting from the downtime. If you must have employees working for longer hours to recover from the breach, the first-party policy will cover your expenses.
2. Public Relations Expenses
Public relations consultants mitigate the impact of a cyber-attack by communicating with the stakeholders effectively.
Ignoring proper communication channels for the stakeholders can make you have false confidence, making a difficult situation worse. First-party cyber risk insurance will cover all the expenses you incur in public relations while mitigating the impact of a cyber-attack.
3. Fraud and Theft
A hacker may be able to access your accounts and transfer funds. You can transfer that risk to the insurance provider with a first-party risk cover.
4. Cyber Extortion
Ransomware is used to extort money from businesses. A report on ransomware extortion cases found that the average ransomware attacker demands $2.2 million to decrypt data.
Encryptions are changing to more complexity, making businesses struggle to get their data back. A first-party risk cover will protect you from transferring these risks to the insurance provider.
5. Forensic Investigation
When you suspect a breach may have occurred, you need to know it happened and the scope and containment measures. First-party insurance will cater for the costs of hiring a computer forensics expert.
#6. Data Loss and Restoration Costs
As a result of a data breach or a denial of service attack, your servers may get damaged, and data is lost. While it’s impossible to predict when you will be attacked, insurance can help you cover the costs of restoring data.
Third-Party Cyber Risk Insurance
On the other hand, third-party insurance can help you defend your business in a court of law by covering the costs of hiring a defense attorney. Third-party insurance doesn’t cover your cyber-related losses but will facilitate your attorney fees, an expert witness, or a consultant to defend you in a legal battle.
A client or a business partner may file a case against you when you’re a cyber attack victim. A third-party policy will help you avoid or reduce fines associated with data breaches.
What Cyber Risk Insurance Doesn’t Cover
Cyber insurances have their limitations when it comes to what they cover. What they don’t cover includes:
- Intellectual property losses: Any intellectual property and lost income resulting from these losses are excluded from a cyber risk insurance cover.
- Proactive measures cost: Cyber risk insurance does not cover proactive measures that help a business avoid future security breaches that are not traditionally included in the cover. Training staff, installing VPNs, and migrating to the cloud are some proactive measures that cybersecurity insurance doesn’t cover.
- Self-inflicted incidents: When your business is involved in cybercrime-related activities, it’s next to impossible for an insurance company to sign a policy that protects you from a data breach.
- Property damage: Your hardware components may get damaged in a cybercrime incident. In case of a denial of service attack, your servers are susceptible to damage. Cyber risk insurance only covers monetary damages and won’t be responsible for hardware losses.
Orion Networks Is Your Partner in IT Consultation and Support Services
Ensuring your business against data breaches gives you the confidence to concentrate on your business activities. Cyber risk insurance will mitigate any costs associated with cyber attacks.
Orion Networks can help you understand the best policy to meet your business requirements. Our experts will help you tailor a complete solution for your business. Contact us today to schedule a consultation and discover how we can provide you with coverage for data breaches and other cyber incidents.
