Cyber security breaches cost businesses billions of dollars each year. Breaches in 2016 reached a record peak. Data from the Identity Theft Resource Center reveals in 2016, U.S. businesses and government agencies suffered a record 1,093 data breaches, a 40 percent increase from the previous year.
According to Deloitte, the current market valuation of cyber incidents is grossly underestimated.
As Emily Mossburg, a principal with Deloitte Touche Tohmatsu LLP and resilient practice leader for Deloitte Advisory cyber risk services, notes, “An accurate picture of cyber attack impact has been lacking, and therefore companies are not developing the risk posture that they need.”
The impact a cyber-attack can have on businesses can be devestating. Given the rise in frequency and intensity of these breaches and the damage they cause, taking out data beach insurance could be a wise move for businesses.
What is Data Breach Insurance?
Data breach insurance is designed to protect and support a business if it becomes the victim of a cyber-attack. This specific type of insurance provides comprehensive cover in the event of a claim related to a malicious cyber-attack or breach of data.
Data breach insurance offers protection if a hacker attempts to hold a business to ransom. The insurance can cover the ransom you are forced to pay the hacker, as well as helping you manage the whole stressful situation.
Comprehensive data breach insurance will also offer practical support in the event of a cyber-attack on your business. Such support includes providing a business with legal advice, forensic investigations, notifications to clients, customers and regulators and support to affected customers, such as credit card monitoring.
A cyber attack that targets a business’s systems can even prevent a company from earning revenue. This disruption caused by cyber hacks and security breaches can lead to businesses experiencing a significant loss of income. Data breach insurance can provide compensation for such loss of income, including where the hack has created damage to a business’s reputation.
What Small Businesses Might Need Data Breach Insurance?
Does your business create and store sensitive data? If data is one of the most important assets of your business, you should consider getting protection from potential hacks and data breaches.
If your business holds customers’ personal data it may be particularly vulnerable to data breaches by hackers who seek to steal personal information and use it fraudulently. Data such as bank account information, customer records, social security numbers and credit card numbers, make appealing targets for cyber criminals. Breaches of such valuable information could then lead to liability claims made against your company, putting your business’s reputation in serious jeopardy.
If your business has a network on which employees save data and a virus gets into the network, your company could be at risk of a data breach.
Naturally, some industries are more data-reliant than others. Some of the most heavily targeted businesses by cyber criminals include financial services, healthcare providers, manufacturers and retailers.
Business owners operating in these categories need to take measures to protect their companies, employees, customers and data from such threats. That said, few businesses are entirely immune to the threat of cyber crime. Increasingly sophisticated cyber criminals leave no stone unturned in their quest to seek out data that doesn’t belong to them.
You may be a solopreneur operating a one-person marketing business from home. Or you may operate a mobile hairdressing business and store personal information of customers on a computer. Virtually any business that relies upon and stores data is at risk of being hacked into.
Natalie Cooper, editor of BankingSense, reiterates the importance of cyber liability insurance for small businesses, stating, “For small businesses, nothing is more important than protecting their livelihood. Cyber liability insurance is another tool they can use to prevent financial disaster in the event of a malicious attack.”
Some of the best data breach insurance policies cover the associated costs of the breach, including forensics, customer alerts, legal fees, crisis management and consumer identity monitoring.
Regardless of the size of business you operate and the industry you work in, if you store sensitive data, investing in data breach insurance would be an invaluable move in protecting your data, and safeguarding your business from attack.
Hacker Photo via Shutterstock