Cyber liability insurance orginates from the USA. Whilst cyber liability insurance has been around for some time, the market has yet to mature in the UK and across Europe.
Insurance broker Duncan Sutcliffe set out the benefits of taking out a cyber liability insurance policy for small and medium-sized firms at E RADAR's recent Trust in Mobile Enterprise Summit.
Cyber liability insurance aims to reduce the financial consequences for your organisation when IT fails for whatever reason. This can include the loss of information either by accident or by a deliberate criminal attack upon your online business systems and networks
When a serious cyber-based incident occurs, the impact for your organisation can be catastrophic. It could result in business closure. Not only have you lost control of your business systems, but the loss may stop you from trading if you have no business continuity plan in force. Similarly, the disruption of your business-critical data, contamination of your online supply chain, breach of the Data Protection Act, loss of IP and confidential data, ransom demands, litigation from regulators, suppliers, customers, staff are all threats to your business survival.
Ultimately, the damage done to your business reputation will destroy any customer, supplier and stakeholder goodwill that may have taken you years to build.
— Will Roebuck (@ERADARtweet) December 18, 2013
Benefits of cyber liability insurance
Whilst cyber liability insurance cannot stop a data breach or theft of confidential information, it can provide financial support towards dealing with the costs of recovery. This includes (1) the loss, damage or disruption of your own data; (2) the loss, damage or disruption of other people’s data, for example supply chain partners; (3) forensic investigation costs; (4) legal defence costs; (5) fines and penalties; (6) PR & reputation management; (7) extortion; (8) network interruption costs; and (9) notification costs & credit monitoring.
Taking out cyber liability insurance should be part of your organisation's overall strategy to implement strong cyber security controls across its online business systems and networks. Duncan Sutcliffe discussed the role of IASME - Information Assurance for SMEs - as an integral part of the toolkit for businesses looking to reduce their exposure to cyber risk.
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