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What is the cyber risk ?

by Geska
in business insurance, cyber risk, News
18 Jan 2016

Technological advances bring news risks

Businesses have changed considerably over the last few decades. We are now able to buy online, pay our bills through the Internet and keep a staggering amount of information on a simple hard drive. Technology keeps advancing and making our work easier, but these advances also create new opportunities for criminals.

Have you ever wondered what would happen if a computer virus attacked your network and wiped out all of your data? How much time would be required to manage the crisis and return your business to the same level of effectiveness it had before the loss of data? Would you need to regain your clients’ trust?

Cyber risk insurance is probably the newest type of insurance on the market, but not the least important. This warranty, which can generally be added to a basic insurance policy, covers damages caused by a breach of confidentiality of data. Did you know that in 2014, 87% of Canadian businesses experienced one or more hacking incidents? [1] Did you also know that at least a third of declared incidents involved businesses with fewer than 100 employees? These statistics are quite worrying in the current technological world, especially as SMEs account for 98% of Canadian businesses.[2]

Consequences of a cyberattack

The impacts of a cyberattack can be unlimited: damage to the reputation of your business, legal issues, possible loss of sales, and the necessity to improve the security of the computer network to name a few. Therefore, costs related to this type of attack can also skyrocket.

In 2013, the Canadian Anti-Fraud Centre (CAFC) received over 16,000 complaints of cyber-related fraud, accounting for more than $29 million in reported losses.[3] This is for the whole country, but on a smaller scale, what would the financial implications be for your business?

Overall, basic business insurance policies exclude financial losses from cybercrime. So, if you are the unfortunate victim of a virus or financial information theft, you have to shoulder the consequences of this attack on your own.

When your network is hacked and its content made public, the reputation of your business is on the line. Protecting yourself with cyber risk insurance provides peace of mind not only to you, but also to your suppliers and the clients with whom you do business. By choosing this insurance coverage, you distinguish yourself from your competitors in the eyes of your business partners. You are proving that you take the confidentiality of the information that you receive seriously and that you are prepared to do whatever you can to preserve them.

Extent of the coverage

On a daily basis, breaches of confidentiality of your data can take several forms: theft or loss of a laptop and the data on it; misplacement of paper files containing important information; hacking of a computer system resulting in unauthorized access to personal information.

Whether you are a manufacturer, a retailer or a service business, cyber risk insurance is recommended to build upon your insurance coverage and strengthen the protection of your assets and your reputation.

The extent of this coverage varies based on the insurers. It is therefore important to identify your needs to find the product that is best suited for your business.

Cyber risk insurance covers the following specific items:

  • The costs incurred to advise clients of a security breach
  • Public relations costs
  • Defence costs
  • Appraisal and investigation costs
  • Operating losses
  • Reimbursement of stolen amounts
  • Equipment repair and data recovery costs
  • Government fines and penalties

Most insurers offer a product that is tailored to today’s businesses, thoughtfully designed and… affordable! Depending on the program you choose and the needs of your business, getting this insurance could cost you as little as 10 dollars a month.

So, don’t put it off! Contact your broker to discuss this opportunity.

 

[1] According to a study by The Boiler Inspection and Insurance Company of Canada

[2] According to the BDC report SMEs at a glance, August 2013

(http://www.bdc.ca/Documents/sbw2013/docs/SMEsAtAGlance_summer_2013_EN.pdf)

[3] Source: RCMP report Cybercrime: an overview of incidents and issues in Canada


Geska