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Is Your Business Insured Against Data Breaches?


Is Your Business Insured Against Data BreachesNational Cyber Security Awareness Month Puts Focus on Cyber Threats

At Axis Insurance Services, LLC, one of our top priorities is to work with clients to make sure they fully understand the threats they face in the digital age… and this goes for all clients across all industries. Whether you’re a small business, tech company, retail operation, hotel chain, medical facility, municipality, nonprofit, or large publicly traded corporation, your firm is vulnerable to some type of privacy, data and network exposures. Depending on the type of breach and its extent, the resulting costs can be substantial and could damage your brand and reputation and even cost you your business.

During the month of October, National Cyber Security Awareness Month, we’re stepping up our communications and joining others, including those in the insurance industry, in raising cyber-security awareness among businesses to help them protect against and respond to the continued rise in cyber incidents. Recent figures, in fact, show that 2012 broke the previous record of cyber attacks in terms of the number of reported data loss incidents. With 2,644 incidents recorded through mid-January 2013, 2012 more than doubled the previous highest year on record (2011). Even more disconcerting is that the extent of attacks is likely to be higher since about 20% of reported incidents did not disclose the number of records involved.

Where do these threats come from?

According to Verizon’s 2013 Data Breach Investigations Report, the top spot for all breaches for 2012 is financially motivated cybercrime (75%), with state-affiliated espionage campaigns claiming the number-two spot (20%). Moreover, the victims of cyber threats for 2012, according to the Verizon report, represented a wide range of industries: Thirty-seven percent of breaches affected financial organizations, 24% affected retailers and restaurants, 20% involved manufacturing, transportation and utilities industries, and nearly another 20% affected information and professional services firms.

Other interesting findings from the Verizon report include:

  • Hacking is the number-one way a breach occurs. In fact, hacking was a factor in 52% of data breaches in the Verizon report
  • 66% of network intrusions exploited weak or stolen credentials (user name/password)
  • 40% incorporated malware (malicious software, script or code used to compromise information)
  • 35% involved physical attacks (such as ATM skimming)
  • 29% leveraged social tactics (such as phishing)

Protecting against risk is gaining momentum

As we discussed in a previous article, a recent report by the Ponemon Institute, a research center dedicated to privacy, data protection and information security policy, shows that most companies when asked feel that security exploits are greater than or equal to a natural disaster, business interruption, fire, etc. As a result, firms are increasingly seeing cyber insurance as part of the solution for managing their security risks, in addition to implementing sound technical protections. To iterate what the report found: 31% of companies in the survey currently have cyber insurance coverage, with another 39% of respondents stating that their organization plans to purchase a policy. Additionally, more than half with an insurance policy believe it is a critical component of their companies’ risk management programs.

What will a cyber policy provide?

There are many different cyber insurance policies available depending on your specific needs and the extent of the coverages you require. Most policies provide benefits for forensics and investigative costs, notification costs to data breach victims, credit monitoring, and legal defense costs. There are also policies available that can be tailored to include reputational damage as well, which involves the costs expended to protect the company’s image and regain customers’ trust and confidence. Additionally, there is a regulatory component of the policy that pays for legal defense, fines and penalties as a result of a breach.

If you don’t have a privacy/cyber policy in place, now is the time to think about it – before a breach occurs. 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.

Sources: Superior Access, Hartford, Verizon, Ponemon Institute

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Blogged on: October 2, 2013 by Mike Smith
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