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Cyber Security Increasingly Seen As A Significant Business Risk


Cyber Security Increasingly Seen As A Significant Business RiskMore Companies Purchasing Cyber Security Insurance to Mitigate Risk

A recent report released by the Ponemon Institute, an organization dedicated to independent research and education that advances responsible information and privacy management practices within business and government, cites cyber security as “quickly moving from being considered by business leaders as a purely technical issue to a larger business risk.” The result: an increased interest in cyber insurance in an effort to mitigate the costs involved due to a data breach.

Recent high-profile cases, in addition to an increase in frequency and severity of data breaches and the subsequent costs involved in the wake of a cyber attack, has risk managers and business owners looking to address this emerging exposure. Ponemon estimates in its 2013 Cost of Data Breach Study that the average cost of a data breach was $188 for each lost or stolen record. What’s more, this doesn’t take into account the time and expense to restore a firm’s brand after it’s been breached.  As a result, risk managers are not only looking to implement better security, training, and awareness programs to prevent or reduce the severity of future incidents, but they are now also looking at the number of insurance policies available designed to mitigate losses from a variety of cyber incidents, including data breaches, network damage and cyber extortion.

In fact, according to the Ponemon report, protecting against the financial impact of cyber security risks ranks as high as or higher than other insurable risks (natural disaster, fire, etc.). Of those that have experienced a security exploit, 76% think this type of incident is greater to or equal to a natural disaster, business interruption, fire, etc. Moreover, among those companies that had an incident in the past 24 months, 70% of respondents say the experience increased their interest in these policies. Of those surveyed 31% of companies currently have a cyber policy, with 39% of respondents indicating that their organization plans to purchase a policy.

Furthermore, those businesses with cyber insurance feel that having the coverage makes their company better prepared to deal with security threats, and believe that it’s an important part of their risk management program.

There are a number of cyber policies available today that cover losses due to human error, mistakes, and negligence; external attacks by cyber criminals; system or business process failures; malicious or criminal insiders; and other incidents. Policies can be obtained to provide the following protections or benefits: notification costs to data breach victims; legal defense costs; forensics and investigative costs; replacement of lost or damaged equipment; regulator penalties and fines; third-party liability; and others. Some policies also offer coverage for brand damages.

At Axis Insurance Services, LLC, we specialize in cyber and privacy insurance and can review the types of policies available to see what makes sense for your business. Give us a call at (877) 787-5258.

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Blogged on: September 17, 2013 by Mike Smith
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