Cyber breaches are an all too common occurrence for many businesses in today’s technology arena. Typically, cyber attacks may cause a variety of losses, including civil liability, regulatory liability, and business disruption, as well as indirect losses such as damage to reputation and loss of customer confidence, which may result in a loss of business as well.
Businesses can try and mitigate some of the direct costs of a cyber exposure by negotiating contracts that include effective risk allocation. However, in practice this is not usually a straightforward process. Companies that provide cloud services, for example, may not feel they should be required to assume responsibility for damages arising out of a data loss or breach, even in circumstances where that same cloud provider is actually at fault.
Laying blame however does not get to the crux of the matter – discovering ways to prevent future breaches and dealing with the issue at hand, which is the theft of personal information that can cause a great deal of concern, along with financial consequences to its victims, is at the forefront of the matter.
Dealing with the issue of cyber theft
The process of identifying and managing cyber risk should be part of every organization’s business practice. After all, it will be difficult to regain the trust of customers and clients once a breach has been discovered. Any media attention brought to the situation only threatens to further damage the reputation of the company that was victimized. It is therefore essential for companies to undertake an audit of the information on their systems and evaluate their information security risks in order to understand the nature of the information at risk.
As part of any pro-active risk management planning, a team should be assembled to undertake a risk assessment and risk aversion plan, along with an incident response plan to handle the issue swiftly and find a suitable resolution. It is of the utmost importance for every business prone to such threats to implement relevant procedures that adequately deal with risk avoidance and mitigation.
Cyber insurance is the only real defense
The costs associated with cyber breaches are often substantial. For any organization though, reimbursement of costs is probably the largest financial risk of a cyber attack. Typically, companies who realize the potential associated with cyber exposure will seek insurance coverage for network security liability, media liability, privacy liability, breach response costs and extortion payments. Cyber coverage will aid in the costs stemming from most liability issues that arise. Speak to an agent about any concerns with this mounting and on-going problem.