Cybercrime numbers are perpetually on the rise, and that means that more companies are finding themselves at risk of data breaches, ransomware, and other forms of cybersecurity incidents. While various tools and solutions within your cybersecurity platform can help protect your company and shut down these breaches before they happen, your organization can still be responsible for any sensitive information stolen due to a cyber risk event.
With cyber insurance, the company’s liability to pay for any damages stemming from a cybersecurity attack is minimized, which alleviates the financial consequences should something catastrophic occur. Think of it as an option in mitigating the mounting cyber risk that comes with doing business online.
What does cyber insurance cover?
Any loss, compromise, or theft of electronic data can negatively impact your business. This can include a loss of confidence in your company that translates to a distrustful customer base or the potential financial costs that come from recovering from such an attack. Cyber insurance can help reduce this financial risk and keep your business from paying for it all out of pocket.
Cyber insurance can help offset:
- Legal fees
- Cost of restoring personal identities of affected customers
- Cost of recovering compromised data (such as a case involving ransomware)
- Overall cost of repairing any damage to compromised computer systems
- Financial cost of notifying customers about any possible data breaches
As more people turn to the internet to carry out transactions, additional data becomes available for harvesting by bad actors. Investing in cyber insurance can be a smart and effective way to reduce the overall risk to your company, should a breach occur.
Who needs cyber insurance?
Any business that creates, stores, or manages electronic data online can benefit from cyber insurance. Sensitive customer data like contact numbers, sales records, personally identifiable information, and credit card numbers are all prime targets for cybercriminals in the digital age. E-commerce businesses can also benefit from cyber insurance, as downtime due to ransomware or other cyber attacks can negatively impact a business’s financials.
What isn’t covered by cyber insurance?
The coverage your cyber insurance policy offers comes down to what type of insurance you need, as well as which company you’re working with. Ultimately, there are several things cyber insurance policies won’t cover:
- Any pre-existing breaches or cyber events that occurred before the policy was purchased
- The overall costs to improve your company’s technology systems, including the cost of new applications as well as the hardening of security systems
- Cyber events initiated and caused by employees or insiders
- The company’s failure to fix known vulnerabilities. If a vulnerability is discovered and your company does not correct the issue, your cyber insurance may not cover losses caused by the resultant breach
- Infrastructure failures due to external factors other than a purposeful cyber event/attack
Obtaining cyber insurance for your company may potentially be more difficult now than in the past. As additional data becomes more readily available online, insurance companies are pushing back, forcing companies to pay expensive premiums for more prescriptive policies. Many companies even require you to utilize certain systems within your cybersecurity platform, such as endpoint detection and response (EDR).
Insurance companies may be less likely to offer your business a solid policy that doesn’t cost a tidy sum, based on varying factors. However, there are some actions you can take to help lower the cost of your premium.
Make sure you’re meeting any requirements that your potential insurance company asks. As noted above, you may often be required to include specific features in your cybersecurity platform.
There are also multiple factors that insurance companies consider when determining the cost of cyber insurance:
- Company history and its customers’ files
- Customer demographics
- Policy terms, like most insurance plans
- Any potential risks to exposure
- Your company’s overall cybersecurity risk posture
It’s important to take this data into account when shopping for cyber insurance.
Keeping your company’s cyber hygiene in check
One potential method that may lower your company’s cyber insurance cost is maintaining an airtight cyber hygiene routine. By being proactive, you can help reduce the risk of cyber attacks, allowing your insurance company to offer you better policies with lower premiums. It’s a win for your company and should be a priority when searching for a cyber insurance policy that works for your needs.
Remain aware of your assets. Make sure you have a way to audit event and incident logs. You’ll also want to identify any devices and software that have access to these assets -- whether it’s authorized or unauthorized. This will help confirm that your assets aren’t being accessed by unauthorized personnel.
Your company may want to configure and monitor all admin and access rights. Set and follow privilege rules to ensure that access to important data isn’t given to unauthorized employees or outsiders. Additionally, take care to deliberately manage hardware and software configurations. Monitoring the use of network protocols, ports, and devices is a great way to practice better cyber hygiene. Pinpoint any unauthorized traffic and shut it down before data can be breached. You will also want to configure and implement security protocols on all firewalls and routers to help mitigate cyber risk.
Whenever an issue or vulnerability is found, patch it immediately. Make use of risk-based patch management strategies to prioritize severe vulnerabilities. Ensure all software and applications are updated with the latest versions to avoid potential exploits.
Data recovery and protection should be another key part of your company’s cyber hygiene routine. Keep proper backups and enforce data protection. Multi-factor authentication can be a great way to protect data and limit access to important assets.
Implement sandbox analysis protocols to facilitate examining and blocking any malicious emails or other communication systems. Make use of the latest versions of security solutions on all layers to avoid exploits and older vulnerabilities. Use your cybersecurity platform to spot early signs of attacks and intrusions, then remediate these attacks before they can breach data and assets. Make use of up-to-date machine learning and artificial intelligence systems to increase monitoring capabilities. This way, your security professionals will be more likely to spot vulnerabilities before they’re exploited by cybercriminals, allowing you to patch them as early as possible.
Finally, train and test your systems and security professionals so that they are always aware of the latest cyber risks and current global events. Keep your security team equipped to handle cybersecurity events to which your company may be susceptible. Run test scenarios to increase response time and train security teams to prepare for a real attack.
Taking all of this into account can help reduce the cost of your cyber insurance premium, while also mitigating the overall risks your company may face.
Is cyber insurance an effective replacement for cyber defense?
No. Cyber insurance should not supersede the need for an effective cyber risk management policy. While it's recommended that businesses purchase cyber insurance, it should only be considered an option, not a requirement.
Instead, a cyber insurance policy should act as a complementary rider to the security checks and balances already in place for any company's risk management plan.
Cyber insurance should be thought of as an effective strategy for bolstering new or pre-established cyber defense plans instead of a complete replacement or alternative.