Cyber risk has been regarded as one of the most significant threats to the financial system, and the need for insurance to protect against it is increasing. Many protection consumers are getting coverage for the first time as pressure mounts on businesses to demonstrate that cyber risk is controlled or reduced. The need for cyber insurance is only going to rise as attacks get more severe and costly.
Cyberattacks have increased at a phenomenal rate during the last decade. The COVID-19 pandemic greatly increased the number of vulnerabilities in the digital environment in 2020, with nearly 75% of security professionals reporting that their third-party-related data breaches surged after moving to a remote workforce.
All of this points to one thing: the cybersecurity insurance industry will rise. According to a recent report conducted by Adroit Market Research in 2018, the industry will expand from $4 billion to over $23 billion over the next six years as more companies spend money on cybersecurity insurance. So, how will you determine the value of your data for cybersecurity insurance?
Measuring the value of your data for cybersecurity insurance
Every business, regardless of size, is vulnerable to cyberattacks. The larger you are, the more vulnerable you can be. Privacy risk, operational risk, and security risk are the three most prevalent cyber concerns you need to remember.
Cybersecurity insurance, in general, is designed to safeguard your business from these primary threats. If you want to obtain cybersecurity insurance, you have to know how to determine the value of your data. The following five factors have been demonstrated to be incredibly significant when measuring the value of data for cybersecurity.
Most businesses, including those that deal with sensitive data and personal information, need to be concerned about network security. It is important to note that network security is one of the common pitfalls that causes a cyberattack, so when a network security incident occurs, all sensitive information is at risk. When a network security incident happens, such as data breach, malware attacks, data theft demand, ransomware, or compromised business email, cybersecurity insurance will protect your company.
Most businesses, especially those that deal with information or privacy risks, value privacy. Customer and employee data could be confidential, and compromises or violations that publish sensitive data not only jeopardize the security of the people affected but also put your company at risk.
Your business is protected from liabilities coming from a cyberattack or a violation of privacy laws with privacy liability coverage in cybersecurity insurance. These third-party expenses can come from a variety of sources ranging from contract agreements to government and law enforcement regulatory investigations.
Consider the following two examples:
—–Defending your company against consumer class action lawsuits and paying a potential payout in the case of a cyberattack or data breach
—–Legal fees, penalties, and/or violations imposed as a result of a government or law enforcement regulatory investigation, both federal and international
Network business interruption
How reliant is your company on technology to function? Companies facing operational cybersecurity risks can benefit from network business interruption coverage. You can recover lost revenues, fixed expenses, and extra expenditures generated during the timeframe when your business was disrupted if your network or the network provider you depend on goes down due to an emergency.
This comprises losses caused by security breaches, such as a third-party hack, as well as system failures, such as a failed software update or human error.
This covers any exploitation of intellectual property, other than patent infringement, that occurs as a result of your services being advertised. It frequently applies to both your online and printed advertising, including social media posts.
A cyberattack could prevent you from meeting contractual agreements and providing services to your customers. With the errors and omissions (E&O) coverage in cybersecurity insurance, you are protected against claims stemming from errors or omissions in the performance of your services.
Technology services such as software and consulting, as well as more traditional professions such as lawyers, architects, doctors, and engineers are a few examples. Should charges of misconduct or breach of contract arise, E&O protection can cover legal defense costs and indemnification in the event of a lawsuit or disagreement with your customers.
The surge in cyberattacks has highlighted the importance of efficient cybersecurity risk management, of which cyber insurance is an important part. Organizations should take efforts to protect their sensitive data and assets from potential threats as soon as possible.—