Cyber risk cover: How much of a priority is it?
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Any company with a web presence can be a target for cyber-attack. At the same time, not all attacks are serious and some incidents can be covered in-house by, for example, having back-up servers. When deciding whether your company needs cyber cover, you need to check the risks against your existing insurance protection.
Cyber insurance protects you against two types of risk: first and third-party. First-party covers risks which only affect your company, such as property damage. Third-party cover is for the impact of a cyber incident beyond the company, information leaks for example.
You may find that your first-party risks are covered under other insurance policies. If your hardware is destroyed in a flood, it comes under your property insurance. At the same time, beware exclusions and don’t assume that you are covered against something like business interruption because an employee caused your systems to fail.
Cyber insurance makes the biggest difference in terms of third-party risk. The growth of digital interconnectedness means there is a good chance that a cyber incident at your company will have a knock-on effect. Moreover, the size of the potential liability normally prevents it from being included in any non-cyber-specific cover. Therefore, if your company were to suffer data theft you may find you need cyber cover for the resulting claims.
Granted, cyber security applies more to certain sectors than others, such as energy, finance or insurance. However, its value is by no means restricted to these high-profile actors. It is still a relatively new type of product, having been on the market for around a decade. Nonetheless, its relevance has grown hugely since then and is still growing.
A final word of warning, don’t assume you aren’t well-known or big enough to be a target. In fact, assume the opposite.
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