Although Sony’s existing insurance covered damage to physical property, they did not have cyber insurance and so were found to be liable for the full cost of the cyber damages. This loss of service cost Sony over $171 million. As an example, in 2011, Sony’s PlayStation network was successfully hacked, leading to a network outage of over three weeks. You still need to have proactive and reactive security measures in place, not least because you won’t find an underwriter who will cover you if you don’t!īut cyber insurance can be an enormous help. It is important, however, to view cyber insurance as a safety net, not as a form of protection in its own right. Much like a disaster recovery plan, you hope you won’t need it, but if you do, not having it will make a disaster even worse. Cyber insurance acts as a safety net in the event that your defences are breached, and disaster strikes. Do I need cyber insurance?Ĭyberattacks are an ever-growing risk in our increasingly online world, and the increased subtlety, nuance, and technological prowess of bad actors mean that even the most cutting-edge cybersecurity can only offer so much protection. Cyber risk coverage essentially gives victims of cybercrime a huge boost in getting back on their feet in the wake of a breach. Some cyber insurance will cover ‘ransoms’ paid for encrypted or stolen data, while others might cover fines or legal costs. If businesses have to remunerate customers or users for a loss of service or data as a result of a cyber incident, insurance can take the hit. It can significantly limit or remove the financial risks of a breach, meaning that any and all costs relating to an attack can be covered. They can result in loss of data, revenue, and customers in the short-term, liability for damages in the medium term, and a loss of consumer confidence in the long term.Ĭyber insurance is hugely important in managing the risks associated with successful cyberattacks. Why is cyber insurance important?Ĭyber attacks can be disastrous for businesses. It is, therefore, a rather different prospect to traditional insurance policies, and underwriters work with a far more fluid, uncertain risk package. Cybersecurity itself changes month to month, responding to new threats and risks, and cyber insurance does the same. It is designed to ensure that disruption to business processes is kept to a minimum, the cost of data loss or leak is reduced or removed, and can also help with legal repercussions and fines.Ĭyber insurance remains a new industry and, as such, is constantly in a state of flux. If your enterprise falls victim to some form of cyberattack, data breach, or other incidents, cyber insurance is designed to cover the costs and get you operational again as quickly as possible. It reduces the financial risk of online business and covers organizations in the event of a cyber attack.
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