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Cyber Risk Management

In today’s digital age, businesses face a growing number of cyber threats that can lead to significant financial and reputational damage. To protect against these risks, it’s essential to understand the various aspects of cyber risk management and the role of cybersecurity insurance. 

This overview below can guide your organization of the risks associated with cyber-attacks, the basics of cybersecurity insurance, what it covers, and how to effectively approach cyber liability.   Let RB Advisory help with this effort.

Cyber Risk Management and Insurance

Understanding the Risks

A cyber-attack can have numerous consequences, including:

  • Identity theft
  • Business interruption
  • Damage to reputation
  • Costs for data repair
  • Theft of customer lists or trade secrets
  • Hardware and software repair expenses
  • Credit monitoring services for affected consumers
  • Litigation costs

Cybersecurity Insurance Basics

  • Cyber security damage insurance: Covers material damages to the company and its employees in case of a breach.
  • Cyber security liability insurance: Covers expenses for resolving the breach and dealing with affected customers and parties.
  • Cyber security insurance is essential for managing financial, material, and reputational damage from a cyber breach. It usually includes monetary payments and access to advisers for damage control and recovery.

What Does Cyber Insurance Cover?

Cyber insurance generally covers your business’s liability for data breaches involving sensitive customer information, such as social security numbers, credit card numbers, account numbers, driver’s license numbers, and health records. It typically helps with:

  • Legal fees and expenses
  • Notifying customers about a data breach
  • Restoring personal identities of affected customers
  • Recovering compromised data
  • Repairing damaged computer systems

Benefits of Cybersecurity Insurance Plan

Traditional commercial general liability and property insurance policies often exclude cyber risks. Cybersecurity insurance covers:

  • Data destruction or theft
  • Extortion demands
  • Hacking and denial of service attacks
  • Crisis management related to data breaches
  • Legal claims for defamation, fraud, and privacy violations However, few policies cover physical damage and bodily harm resulting from cyber-attacks on critical infrastructure.

How to Approach Cyber Liability

  • First-party insurance: Covers damage to digital assets, business interruptions, and sometimes reputational harm.
  • Third-party insurance: Covers liability and costs for forensic investigations, customer notification, credit monitoring, public relations, legal defense, compensation, and regulatory fines. The best approach involves identifying and securing your company’s most valuable digital assets, then insuring the remaining risks. Check existing insurance packages for overlaps with cyber insurance policies. Note that cybersecurity insurance may not cover intellectual property theft or the reputational damage and business downturn resulting from a security breach.