Here we have a look at some of the critical factors you must be aware of before buying cyber insurance.
As businesses go digital, so does crime. With an exponential rise in online attacks in the past decade, businesses and individuals have recognized the urgent need to build security measures against various kinds of attacks. From malware to ransomware to distributed denial of services(DDoS) attacks, there are several ways through which online platforms and company data can be compromised. In the wake of such attacks, certain products designed to protect against such devastating situations and mitigate losses in case an unfortunate event occurs together consolidate what is known as cyber insurance.
Cyber insurance is important because most business dynamics have shifted to a digital platform. While every business protects itself against natural disasters and business risks, it has become equally important to protect businesses against cyber risks as well.
Cyber insurance like any other kind of insurance covers a range of cyber-attacks which include attacks from hackers and other criminal elements, protection against copyright infringement issues as well as privacy and data protection.
Let’s have a look at some of the key factors that go into deciding whether your business requires cyber insurance or not:
1. Is Your Data Worth Insuring?
As a business owner with a large steak in a particular sector, the first thing you need to assess is if your data is worth the investment. If your business suffered a data breach, a standard insurance policy won’t cover data restoration. Therefore, if your business faces stiff competition and faces the probability of a cyberattack, it is worth having cyber insurance to cover the losses in case of such an attack.
2. Is it a financially wise decision?
The amount of money your business might lose out in case of a data breach or any kind of cyber attack is a lot more than the money you will spend on buying cyber insurance to cover for such an incident. The most important thing you need to assess as a business owner, then, is to understand the extent of damages that you and your clients will undergo in case of a cyberattack. If the damages overweight the coverages, then it is wise to have your business cyber-insured.
3. Understanding cyber-insurance coverage:
Before buying cyber-insurance, it is important to know exactly what it covers in the event of a breach. Typically, cyber-insurance policies contain first-party coverages which include costs for a direct security breach in your business. However, there might be a situation where a third-party(a client or a company) may sue you for negligence. Understand the extent of coverages that a cyber-insurance policy has to offer and compare it with the kind of risks you might face in case an attack occurs. If you run a company or a business where any sort of compromise of data or privacy will result in a lot of damage across many verticals, then it is crucial to buy cyber insurance.
4. Assessing damage to reputation:
Any business whether it’s online or offline has a certain standard that it maintains that results in sustaining business as well as attracting more customers. In order to promote businesses, marketing and social media teams are often employed to boost the company’s image. Any kind of attack on a company’s social presence can be devastating for its business. Therefore, assessing the vulnerability of your business based on your social presence is another important factor when buying cyber insurance.
5. Risk assessment and its importance:
Risk assessments performed by any organization in today’s day and age can help in identifying, evaluating and rectifying gaps that might prove to be vulnerable to the company. Finding a way to close these gaps through assessing liabilities in business operations as well as ‘outside threats’ can be extremely beneficial in the long run. Cyber-insurance not only provides protection against such threats but also helps solve the problem of risk assessment and can help any business identify potential dangers to its operations.