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All businesses need Cyber Liability Insurance

By Ben Bowen on

Data is the currency of modern business that guides key decisions. Without it, we cannot operate. If your business relies on data, then it is very likely that you are exposed to a significant number of cyber risks.

Regardless of how good your company IT systems are, there is no 100% guaranteed way to protect your data. A data breach will not only affect your business, it can negatively impact your clients and customers.

Stolen credit card numbers, financial reports, medical records, birth dates and the loss of sensitive personal data can leave your business exposed to litigation and / or fines and penalties - causing enormous damage to your bottom line and reputation.

Traditional policies, such as Business Insurance and Liability Insurance, do not extend to cover the fallout of a cyber-attack. Even though a cyber-attack can effectively shut down your business, there is no physical loss sustained to a tangible asset. As a result, insurers have developed a specific type of policy - Cyber Liability Insurance.

An increasingly common occurrenceCyber stats incl sources v2

Consider the following cyber-attack experienced by a small engineering firm: 

The firm’s IT systems were overrun by a ransomware virus, causing their server to become completely encrypted and inoperable. The cyber-criminal demand a BITCOIN ransom equivalent to $10,000. The firm, discovering that there was no viable back-up of their data to restore, decided to pay the ransom. Once paid, the cyber-criminal provided a decryption code which restored their system.

The outcome: a total cost of $18,650, including the $10,000, was incurred by the company which included IT expenses to restore the system from scratch. (i)

An important point to consider: while the cyber-criminal was true to their word, they were under no obligation to adhere to their promise and provide the decryption key once the ransom was paid, nor were they obligated to refrain from attacking the same engineering practice a second time to extort more money. After a ransom is paid, cyber criminals have been known to unlock data for 24 hours before again encrypting system data and demanding more money to re-enable access!

Across every industry

In October 2016, the Australian Red Cross had roughly 550,000 patient records leaked onto the web. These records contained personal data ranging from names and addresses to drug use and medical conditions. The breach was a combination of human error regarding the file location of patient records, and a hacker finding their way into the Red Cross’ public information server.

Irrespective of the size of your business, or your industry, companies that connect to the internet in ANY way are vulnerable to attacks which can severely impact their bottom line, their reputation, and see IT support costs spiral out of control.

How can Cyber Liability Insurance protect your business?

Cyber Liability Insurance is an essential insurance cover to hold within your Business Insurance program to provide a financial buffer should you fall victim to a cyber-attack.

Key benefits:

  • Financial compensation to recoup costs that result from a security breach – including regulatory fines - which can amount to $1.7 million.
  • Compensation for clients and customers who suffer financially or emotionally as a result of stolen data.
  • Extends to include expenses for legal representation and costs that incorporate forensic and legal counsel.
  • Covers the cost of professional consultants to assist in repairing damage to your company’s brand and reputation.

There are a wide range of suitable covers available for both small-medium enterprises and large organisations.

To obtain your Cyber Insurance quote, or to find out more about the implications of a cyber-attack on your business, please contact Whitbread on 1300 424 627 or info@whitbread.com.au.

 

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This insight article is not intended to be advice and you should not rely on it as a substitute for any form of advice.  Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

Source:
i) DUAL Claims Examples - Cyber & Privacy Protection

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