Since Target's data breach last December, we've seen a flurry of reports about what businesses can learn. One of the most valuable lessons is simply a greater awareness and respect for this type of threat. Many business owners and executives have an “it-won't-happen-to-me” attitude. As a result, they don't do enough to
prevent cyber-crimes, establish a disaster recovery
plan and
protect themselves with insurance coverage.
What should you do to prevent, plan and protect?
The best practices that work for all businesses are easy to come by. You can Google them. But to find out what you need to do for your particular business, you should sit down with other stakeholders and a risk consultant to work out a strategy for all three areas. If you aren't ready to commit to a comprehensive strategy, you should at least have bare bones cyber liability coverage. It's a bad business decision to neglect this issue, especially today.
It can happen to you
In recent surveys by Chubb, 27% of private companies and 63% of public companies "expressed concern" about cyber risk.* Yet only 5% of the private companies surveyed carried cyber liability insurance. One explanation for this is that 39% of them thought cyber risk was covered under their commercial general liability (CGL) policy.
It's a mistake to assume you're covered under CGL. Insurance companies typically argue that cyber risks are not intended to be covered under CGL policies or other traditional types of insurance.
Public companies are slightly better at obtaining insurance coverage for cyber liability. Compared to private companies' 5%, 35% of public companies in the Chubb study said they had a cyber-liability policy.
Why don’t more companies have coverage?
Many companies are not familiar with cyber liability insurance or are skeptical about it. That's why it can be helpful when a cyber-crime like the Target breach makes big news. It's a wake-up call.
A 2013 report by NetDiligence says:
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The average cost for a data breach in 2012 was $3.7 million.
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Lost and stolen laptops and devices were the most frequent cause of loss (21%), followed by hackers (19%).
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Personally identifiable information was the most frequently exposed data (29% of breaches), followed closely by protected health information (27%).
Take a step toward prevention, planning and protection
For information about cyber liability insurance, contact Associated Financial Group at
800-258-3190 or
info@AssociatedFinancialGroup.com.
* Sources: Chubb 2013 Private Company Risk Survey and Chubb 2012 Public Company Risk Survey,
www.chubb.com.