Cyber threats of growing variety hit all sizes of organizations almost daily, from small businesses to the federal government. Those who aren’t anticipating cyber threats and how to take care of them may be pressured to handle an issue when they least expect it. Below are eight reasons you should buy cyber liability insurance.
- You’re dependent on technology for your business to operate.
- Your business holds a large volume of personal data.
- You must comply with regulations.
- lt’s protection when security falls short.
- It’s part of your leaders due diligence.
- It comes with a simple, step-by-step response plan.
- Pre-loss services are included in the insurance.
- It’s a contractual requirement for some.
To begin you should conduct a risk assessment, which is a three-step process. In order to successfully transfer risk, it’s essential to recognize, assess, and understand the risks you face as best as possible.
Step 1: Identify Common Cyber Exposures
Cyber risks can take many forms in today’s organization, and trying to understand the many ways your company is subject to cyber risks can be a difficult task. Here are four common cyber exposures that impact the majority of companies:
- Operational Risk: This is a reliance on technology to do business. This dependence on technology for providing services and generating revenue creates a big risk to the organization in the event of a cyber hack.
- Privacy Risk: This is related to regulations and contractual indemnities that enclose the rights of your clients. Privacy legislation defines rights with regard to the gathering, processing, storage, and use of data through many laws. A variety of business-to-business contracts require indemnification for the destruction associated with a data breach.
- Security Risk: This is the risk commonly associated with cyber. It can be a data breach, a phishing attempt, or a malware attack. The impact from a security incident can be damaging both monetarily and reputationally.
- Service Risk: The negligence of your product/service to perform as intended. It usually doesn’t impact just one customer, but rather all your customers at the same time
Step 2: Conduct Cyber Loss Modeling
Once you have recognized the cyber risks facing your business, its time to quantify the risk through cyber loss modeling. This can be used to identify how much risk you’re willing to take and how much you’d rather move to an insurer.
The quality and quantity of data will essentially ensure the accuracy of the results. Modern modeling tools explain the severity of your potential financial losses under a variety of scenarios. Such as a network outage, data breach, or a software impairment.
These modeling tools imitate a year of potential losses using calculated variables specific to your organization, factoring in items such as your industry, size, and PII record count volumes. A business can get a customized risk curve that your organization might face in a given year. You are able to see the results on the loss curve to know the proper limit to buy.
You can model individual scenarios to determine potential losses with data breach calculators. These are often a simple math equation based on the number of records exposed, the type exposed, and some average values of specific loss types, such as consumer notification costs or credit monitoring costs.
Business interruption worksheets can give you an estimate of the organization’s potential losses suffered during a network outage. A business interruption model can recognize insurable losses, such as continuing operating expenses and lost profits. which may be suffered during fluctuating lengths of outages.
Step 3: Access Your Cyber Security
Understanding your cyber security abilities provides a strong foundation for mitigating the risks you may encounter. In order to evaluate your cyber security, we suggest selecting the correct framework first to base your assessment. Many industry groups offer samples and are helpful resources to decide where your approach needs work.
- NIST (National Institute of Standards and Technology) sustains a cyber security framework that can help you see where you match up and what is available to any organization.
- The Center for Internet Security (CIS) Top 20 Controls is a set of actions categorized into basic, foundational, and organizational controls.
- The C2M2 Program is created to assist businesses to improve their cyber security resiliency through an evaluation process.
A Good Cyber Policy
Cyber insurance coverage is usually a mixture of five different components: network security, privacy liability, network business interruption, media liability, and errors and omissions. Network security and privacy liability may consist of first and third party costs.
The most common security shortfall event that has currently led to organization interruption claims is ransomware. During this take over, they will encrypt access to your organizations network data and drives. Then they will offer to restore it for a fee, or “ransom.”
What Limits to Choose
When choosing limits, some businesses turn to their neighbors or friends for reference. But, this is not an ideal approach for deciding what cyber limits to purchase. Each company introduces distinctive risks in the direction that they collect and store business data, their policy on security, and the amount of risk they want to take.
IBC’s Solution
As with any timely situation, it’s important to have a response plan well in advance. This will assist you not only to get back to business quicker, but also to potentially steer clear from lawsuits and regulatory inquiries.
We will walk you through an incident response plan. This tool imagines different scenarios and pulls out the questions you should know the answers to in advance, such as who needs to be involved in a response to an incident and when to escalate problems with in the organization. In any event, we work hard to provide expert counsel and fierce advocacy to protect our clients. Contact us here or call 712-277-2424.
