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What is cyber insurance?

20 March, 2024

In an ideal cyber world, a company would achieve foolproof cybersecurity, ensuring hackers fail every time

However, cyber insurance can be a valuable asset for many organisations to protect against the inevitability of human error.

As cyber-attacks become more sophisticated, the risks they pose also increase.

These attacks aren't mere inconveniences, either. Indeed, they can result in significant financial loss, reputational harm, and legal liabilities.

Accordingly, many businesses purchase cyber insurance to help reduce the strain caused by a cyber-attack and enable them to bounce back from a breach.

But what is cyber insurance, and how could it benefit your organisation? Join us as we explore the topic.

Understanding cyber insurance

Cyber insurance is a specialised form of insurance designed to provide financial protection against losses resulting from cyber-related incidents.

Its purpose is to help businesses mitigate the financial impact of cyber-attacks and data breaches by covering various expenses and liabilities associated with such events.

These policies typically offer several types of coverage tailored to address different aspects of cyber risk management:

  • Data breach response: This helps cover the costs of responding to a data breach, such as investigating what happened, notifying affected customers, and managing the fallout to protect reputations.
  • Business interruption: If a cyber attack disrupts business operations and causes a loss of income, this coverage can help make up for that lost revenue and cover any extra expenses needed to get back on track.
  • Liability: This protects businesses from legal claims and expenses if a business is sued because of a cyber incident like a customer's data being compromised due to negligence.
  • Cyber extortion: If cybercriminals demand a ransom to release data or systems, this coverage can help resolve the situation, including covering the ransom payment if needed.
  • Cybercrime: This covers losses from various cyber crimes, such as fraudulent transactions or scams that target your business.

Assess your business's cyber risk profile

Understanding your business's digital risks is key. Review your cyber risk profile closely to identify potential threats and weaknesses.

Just like checking for leaks in a roof before a storm, assessing your cyber risk profile helps you prepare for cyber trouble by choosing the right type of insurance.

Consider the cyber threats that could affect your business, such as data breaches or scams.
Then, think about how these threats could harm your operations and finances.

For example, a data breach could lead to a loss of customer trust and expensive legal bills.
The right insurance can help to mitigate these consequences.

If you're unsure where to start, insurance companies can help identify your vulnerabilities and tailor a cyber insurance policy to fit your needs.

Evaluating the limitations and benefits

Recognising that cyber insurance policies often come with limitations and exclusions is important. These can vary, but common ones include things such as acts of war or intentional acts by employees.

It's crucial to be aware of these limitations as they can affect the adequacy of your coverage.

Despite these limitations, cyber insurance provides significant benefits. It offers financial protection against unforeseen cyber incidents, which can save your business from large costs.

For example, it can cover expenses related to data breach response, business interruption, and legal liabilities.

By understanding both the benefits and potential limitations, you can make an informed decision about whether cyber insurance is the right choice for your business.

How to integrate cyber insurance into cybersecurity processes

Tailored coverage

Work closely with your insurance provider to tailor a cyber insurance policy that aligns with your business's unique risk profile.

Ensure that the policy provides adequate coverage for potential cyber incidents, including data breaches, business interruptions, and legal liabilities.

Incident response planning

Develop a strong incident response plan that outlines the steps to take in the event of a cyber incident.

This plan should include procedures for initiating insurance claims and utilising coverage effectively to mitigate financial losses and restore normal business operations.

Employee training and awareness

While cyber insurance acts as a safety net, cybersecurity awareness training remains a vital part of any cybersecurity strategy. Indeed, many insurers require employees to undergo regular cybersecurity awareness training as part of their agreement.

Educate your employees about the importance of cybersecurity best practices and the role they play in protecting the business from cyber threats.

Regular policy review

Review your cyber insurance policy regularly to ensure that it remains up-to-date with your changing business needs and cyber threats.

Update your policy as necessary to address any new risks or vulnerabilities.

By incorporating these strategies into your cybersecurity processes, you can effectively integrate cyber insurance into your overall risk management strategy.

At Bob's Business, we are committed to helping organisations strengthen their defences against cyber attacks. That’s why we’re an Aviva Specialist Partner, offering Aviva customers our award-winning, industry-leading cybersecurity awareness & education products at a discounted rate.

We offer tailored solutions to address your cybersecurity challenges and blindspots with gamified eLearning that your employees actually enjoy!

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