Cyber insurance provides businesses with financial protection and support in the event of a cyber-attack or data breach.
According to the Insurance Council of Australia, there was a 26% increase in notifiable data breaches between January 2021 and January 2022, with 25% of these breaches being due to human error.
With such worrying numbers and an increasing trend towards attacks, it is essential for businesses to have a comprehensive risk management strategy in place, including a robust insurance policy -along with regular staff training that includes education and awareness around phishing scams and social engineering.
In this article, we will explore the importance of cyber insurance and why it is a crucial component of any business’s risk management plan
What is cyber insurance?
Cyber insurance, also known as cybersecurity insurance or cyber liability insurance, is a type of insurance designed to help businesses and organisations lessen risk from cyber-attacks or data breaches.
According to Arma Insurance, “Cyber protection insurance is a relatively new form of cover, it is designed to help protect your business from the financial impact of hacking or a data breach”.
Policies can vary widely in terms of coverage and cost, depending on the size and type of business, the amount and type of data it collects and stores, and the level of risk it faces.
As cyber-attacks become more common and developed, cyber insurance has become an increasingly important part of a comprehensive disaster recovery strategy for businesses of all sizes.
Why is it important?
Cyber insurance is important to protect businesses from financial losses associated with cyber-attacks or data breaches. As noted with recent high-profile attacks on Optus customers, a cyber-attack can cause significant damage to a company’s reputation, and customer trust. Cyber insurance policies can cover the costs of investigating and responding to a data breach, the associated legal fees, any business interruption/downtime losses, and even potential extortion payments.
Some policies offer risk management and prevention services to help businesses prevent future attacks. With the increasing frequency and severity of cyber-attacks, having cyber insurance is a crucial part of any business’s risk and cyber security strategy.
Organisations that are data driven and reliant on technology –such financial institutions, healthcare providers, and technology firms, are at a higher risk of cyber-attacks and thus, may need a more wide-ranging cyber insurance policy.
However, even businesses that have a perceived ‘strong’ cybersecurity plan in place, there is still a risk of an attack. Cyber insurance can provide an extra level of protection and help a business recover much more quickly.
Who Needs Cyber Insurance?
As mentioned, if your business if one that collects and holds data or has even the simplest of websites, you’re vulnerable to hackers.
Any company that collects and stores personal information, such as email addresses and credit card numbers, is vulnerable to cyber-attacks and can certainly benefit from having this insurance.
What can it cover?
- Business interruption losses
- Cyber extortion
- Data replacement
- Third-party losses
- Crisis management expenses
- Point-of-sale intrusions
- Web app attacks
Overall, cyber insurance should become an essential part of any business’s risk management or disaster recovery strategy.
We also ascribe a business risk management essential being aligning with a reputable disaster recovery and backup provider, such as Veeam, and working alongside their 3-2-1-1-0 rule for a well-rounded recovery strategy.
By working with a reputable insurance provider and implementing strong cybersecurity awareness measures and procedures, as a first line of defence, businesses can better protect themselves and their customers from the ever-growing threat of cyber-attacks.