Cyber attacks are a growing threat to every company that has a network, an online presence and holds or accesses confidential data.
In 2014 cyber crime cost South African businesses close to R6 billion and the threat is growing.
Below we unpack the essential issues.
What is cyber insurance?
Cyber insurance assists companies to recover from data loss and reputational damage due to a security violation or other cyber events.
What are the types of risks companies are exposed to?
Malware is the software hackers use to gain access, damage or destroy your computers or network.
System downtime or service interruption
Downtime refers to a period of time that your IT system fails to provide or perform its primary function. In this digital data-driven world, system downtime or service interruption poses a significant threat towards an organisation’s business operations.
IT system downtime can damage a company in a variety of ways like lost revenue, reputation damage, lost productivity and potential customer loss.
Loss of data
When companies have IT problems and lose data their backup systems usually retrieve the data. But some malware can destroy backup systems and therefore data loss could be permanent.
This could have catastrophic results for large or small businesses.
Loss of revenue and higher expenses
IT system outages can result in lost revenue in a variety of ways. One example is revenue loss in the form of missed business opportunities.
Outages can also necessitate overtime and other expenses to repair any damage done.
Business being held to ransom (cyber extortion)
Ransomware is a serious and growing cyber threat that often affects individuals or businesses and has recently made headlines worldwide.
Payment demands can range from hundreds to millions of rands.
Social media makes it easy for customers to comment upon their experiences online. If outages prevent your firm from meeting customer requests or commitments, it can quickly damage your reputation.
Litigation due to data being compromised
If a hacker gains access to your customer information, including their banking details, you could be held liable due to the information being exposed. This is a real risk today.
What insurance coverage is available?
Cyber insurance can be a type of standalone insurance. It is usually broken into first party and third party insurance. The following elements should be included in your coverage.
• Data recovery and business interruption
• Crisis management expenses
• Cyber extortion via ransomware
• Money stolen through electronic crime
• Coverage for responding to security failure
• Coverage for third party claims
• Regulatory fines and penalties
In today’s environment cyber insurance is no longer a luxury, but a business necessity. It however should only form part of your larger data protection plans. You will still need to take care to protect your digital assets and follow relevant security protocols.
If you would like more information, click here to contact your broker.
* This article is informational and educational and should not be used or relied on as financial or professional advice. No liability can be accepted for any errors or omissions nor for any loss from reliance upon any information herein.