Financial Protection for A Security Breach
Data breaches not only threaten customer privacy and compliance with current laws, but also business solvency. Ponemon Institute’s report, Managing Cyber Security as a Business Risk: Cyber Insurance in the Digital Age, indicated that the average cost of data breach averages $188.00 per document. When considering that the Target data breach has now reached 70 million people, it is easy to see how that cost can add up very quickly.
Information security is not just an IT issue but also a risk management issue. To protect from security breach damages, many organizations invest in cyber insurance.
Cyber insurance mitigates financial losses arising from data breach, network damage, viruses, and other computer security issues. According to Ponemon, 31% of respondents indicated carrying cyber insurance coverage. 39% intended to purchase a policy in the near future.
The most common area requiring coverage was the loss of confidential information through employee negligence (45%) followed by disruption to business operations (34%).
This industry arose when companies discovered traditional property insurance was inadequate for covering computer security damages. Many filed claims for cyber damage under their traditional policies, only to be denied. Lawsuits filed in response to denied claims ended with courts deciding in favor of the insurance companies.
Is Cyber Insurance Right For You?
If a business regularly handles account numbers, medical records, or other sensitive electronic information, cyber insurance is an excellent precaution. However, it is an after-the-fact response that covers financial damages. Impact to your business’ reputation, loss of goodwill and government penalties still occur. This insurance should exist in addition to prevention — not in replace prevention.
To avoid security breaches and data losses, but also take the following precautions:
- Keep virus software and firewalls updated.
- Protect passwords. Do not leave them written down and in the open.
- Install software that can de-authorize/de-activate laptops and smart phones remotely, in case of theft.
- Implement document shredding for hard copies that contain sensitive data.
Keeping good security routines is the best way to protect information and the reputation of your business. However, keep a cyber insurance policy in case the worst occurs.
Do you think buying this type of insurance is worth it?