Technology has become an integral part of every business and operation. It has made things much easier in many different ways. But it can still be a considerable vulnerability if not appropriately maintained and protected. Many companies have experienced that through hacking attempts, data breaches, and phishing attempts, to name a few.
That's why risk management has become crucial. And cyber insurance is a great way to protect your business in case of a breach. Every company should include it in its risk management strategy.
What Is Cyber Insurance and Does Your Company Need It?
Cyber insurance is also known as:
- cyber liability insurance coverage,
- cyber insurance policy,
- cyber risk insurance.
Its primary purpose is to help businesses in case of a data breach or another similar cyber incident. Usually, when such an event occurs, PR issues aside, companies handle a broad set of financial costs and losses. That's why one in every three US companies has purchased at least one form of cyber insurance.
There are many different kinds of cyber insurance, each of which covers different things. In general, this type of insurance covers expenses that concern first and third-parties. These are some of the most commonly reimbursed expenses:
- Lawsuits and extortion
- Company losses
- Investigations
- Privacy
Lawsuits and extortion expenses include different forms of legal fees associated with cybersecurity incidents. It can cover settlements, GDPR fines, IP (intellectual property), and confidential information, among others.
Company losses can include a wide range of costs. For example, losses occurred because of your network being down, business interruption, the costs of recovering lost data, and so on. In general, these are all costs involved in crisis management that were a subject of an error and omissions policy.
Investigations are a mandatory part of every cybersecurity incident. It is imperative to know what caused the breach, where the weak spot was, whether it involved employees or outside influence, and so on. But although very useful, investigations are costly. That is why you should think ahead and get cyber insurance, even if everything seems to be running fine.
Privacy concerns and customer notifications are a crucial step in mitigating post-incident losses. Notifying customers and other third-parties is mandatory by law in many countries. That also includes monitoring account activity for users who have been affected by the incident.
Security Measures You Should Consider Implementing
Insurance may not be an option for you and your business at the moment. Or you may want to take some extra precautionary measures anyway. Then here are some pro tips that will keep you on top of things.
Use Encryption
Encrypting data is one of the most useful measures for ensuring minimal damage, even if a breach does occur. By encrypting communications, credentials, and files, you disable hackers from using the stolen information. Because of encryption, it wouldn't have any value to them without the encryption key.
But not all encryption protocols are the same. So you should consult with professionals to determine which type is the most suitable for your company's needs. If you're a smaller business or a startup, you can always opt for some free encryption software solution. It should cover the protection of essential files.
Keep Up with GDPR
GDPR stands for General Data Protection Regulation. As the name suggests, it is a set of various rules and guidelines on how to handle and process user data. Although it belongs to European law, if your company has customers or partners from Europe, it is critical to comply with GDPR.
In case of a data breach, if GDPR determines that your company wasn't compliant, you can face severe financial fines. British Airways had to pay a staggering $230 million after suffering a data breach. It was a historical example that everyone should learn from.
Employee Education
Statistics say that employee negligence is the leading cause of data breaches and information leakage. You should be proactive about cybersecurity. Show your employees the best practices when it comes to handling sensitive information. Then your chances of preventing a cyber incident will increase. You can hire professionals who will teach you and your employees how to recognize phishing emails, how to store their passwords, etc.
Implement Multi-Factor Authentication
Multi-factor authentication is a fantastic layer of security that makes things much harder for hackers. It comes in various shapes and forms, including:
- SMS verification
- Call verification
- Biometric verification
- Email verification
- One-time password
Let's say a hacker gets an employee's username or password. They still won't be able to access their accounts without passing the second authentication factor.
Final Thoughts
Cyber insurance is a handy addition to your company's risk management strategy. But before making any decisions, set aside some time to learn more about it and see which insurance packet is the best for your needs. It would be best if you would combine cyber insurance with extra cybersecurity measures. Then you'll be both ready to mitigate most risks and won't suffer too much if, in the end, something fails. Remember, cyber insurance doesn't fight against cyberattacks - it only offers a helping hand.