How can Cybercrime Insurance help your company?
Related: Cybercrime Insurance
Have you seen a tightrope walker? If you do, you might have seen some who use safety harness or safety net as they do their feat. But if they are a true master of their craft, why do they need these things during performance? I guess you already know the answer – for safety just in case the worst happens.
Yes, they are experts in their field, but still, they are aware that they don’t have control over everything. The wind might become stronger. The rope might collapse. Or fear might get into them. No matter the reason, these tightrope walkers are ensuring that they will still be alive no matter the outcome of their performance.
This analogy could also be applied to cybersecurity. The company may hire the best IT managers and employ the best security software and hardware, but still, they don’t have control over everything. These companies still need a safety harness or net in terms of cybersecurity – and this is in the form of Cybercrime Insurance.
What is Cybercrime Insurance?
Cybercrime Insurance is a protection for liability arising out of unauthorized use of, or unauthorized access to, electronic data or software within your network or business. It indemnifies both first-party (the insured) and third-party losses. First Party Coverage includes network repair due to cyber-attack, data loss and system storage, business interruption, crisis management, public relations expenses, notification expense, and may even cover cyber extortion. Third Party Coverage, on the other hand, includes defense cost, legal liability, and claims arising from negligent transmission of virus to third party who used the company's website for business transaction.
Why should you get Cybercrime Insurance for your company?
In the past articles, we learned about the cybersecurity framework and how to build a cyber-secure culture. These are essential knowledge that we need to implement in our fight against cybercrime not only to protect our company but most specially to protect our customers. However, this protection is not complete without a cybercrime insurance. Just like the safety harness or safety net, the cybercrime insurance ensures that if the worst thing happens – that is, a data breach or cyber incident – the company and its customers can rely on the policy to provide support. The following are reasons why you should get Cybercrime Insurance for your company:
1. Businesses are going digital.
Technology has truly disrupted the world of business. With its ability to offer increased efficiency and faster connectivity, it has become an imperative for companies to adopt technology in one way or another. The latest testament to this is the growth of e-commerce in the Philippines during the pandemic. With limited mobility of people, there is no other way for businesses to continue to thrive but to rethink their business model and incorporate technology into its operations. This is why, in the November 2020 report1 released by Google, Temasek, and Bain & Company, the Philippines saw a growth of 55% in e-commerce.
However, adoption of technology doesn’t come without a risk. Companies are barely ready as they do not have the right policies and structure in place in order to protect themselves, and this creates opportunities for cyber-criminals to take advantage. This is why cybercrime insurance is necessary especially for companies that are just starting in their digital transformation journey.
2. Data being stored by companies are growing exponentially.
With the rise of e-commerce and digital adoption, it is only but natural for the data being stored and managed by companies to grow. And because of faster internet speed (in the advent of 5G) and ever-improving data storage, it is expected that businesses will see the need to setup data lakes and data warehouses. This is essential if businesses want to gain insights from the data that they have gathered to develop better products and services for their customers.
However, not all companies are in this kind of maturity yet. Some of them, especially those who were forced by the pandemic to ride the tide of digital adoption, may find themselves struggling to manage this newly found massive amount of data. Without the proper cybersecurity framework in place, this could lead to mismanagement and mishandling. Again, an opportunity for cyber-criminals to take advantage.
3. Increase in entry points.
Another trend that the pandemic has accelerated is the adoption of work from home setup. With the lockdown restrictions in place, companies have no choice but to allow those employees, who can do their work from the comfort of their homes, to do so. Businesses are in survival mode, so they will do whatever it takes just for the operations to keep running. This presents another challenge as people do not have the necessary setup in their homes. Their connection might not be secured, and the devices that they are using, if not sponsored by the company, may contain malicious software that can harm the business.
Another concern is that humans are still one of the most vulnerable entry points to any company. Cyber-criminals employ social engineering2, which is the use of manipulation in human interaction to obtain the necessary information. Cyber-criminals may present themselves as persons of authority or persons of trust. And since employees are now physically far from their colleagues, it might be easier for cyber-criminals to exploit the gap.
4. Consumers are becoming more conscious about data security.
News about data breaches and the passage of data privacy laws around the world have made people more aware about cybersecurity. The media is also helping in creating more awareness especially with the release of documentaries such as “The Great Hack” and “The Social Dilemma”. This is a good thing for the people especially that these data when exploited can be used for fraud and for manipulation.
However, this also means additional pressure to businesses since there is reputational risk involved if customers’ data are mishandled. News of data breaches can scare off potential customers, and in this way, the companies are being penalized by the market. You may ask: how can cybercrime insurance help the companies in this situation? The answer is through financial support. Having cybercrime insurance will help the company in defense cost and legal liability that may arise because of the breach. The company will still have to take on the hit on reputation but having the ability to settle claims may dampen the impact.
We at Trinity hope that the article above will be helpful for you and your company in the fight against cybercrime. This is why, apart from standard insurance products, we are also offering specialty insurance lines; one of which is Cybercrime Insurance.