Businesses use cyber insurance to mitigate the risks associated with security breaches. It offsets the costs that would be needed by a company to recover from a cyber attack. Given the laws and regulations governing the requirements on a business before and after a cyberattack, the cost of dealing with the fallout can be exorbitant.
Let’s review the costs involved in a cyberattack to provide a good understanding of why a business would need cyber insurance. These are typically the costs that would be covered by a cyber insurance policy.
Attorney Fees
When a cyberattack occurs, there’s no doubt that you will need an attorney to provide guidance in understanding the legalities of the situation. There’s also a good chance that lawsuits will follow. And you will also have to deal with issues surrounding fees for not satisfying regulations and the potential loss of intellectual property.
Customer Notifications
When there is a breach of data, businesses are required to notify those affected. Additionally, you may be responsible for covering the costs of credit monitoring services for the customers affected.
Forensic Investigations
There will need to be a forensic investigation to find out what happened to prevent the same problem from happening again. The inquiry can also facilitate pinpointing the cause to hold the right parties accountable.
Business Interruption
When a breach in security occurs, there will likely be an interruption in business. It usually results in the network being down for a while and possibly even the loss of data. The financial loss for these components will need to be recovered.
Reputation Management
When there is a security breach that affects a major retailer, it’s often front-page news. As a result, it will be necessary to engage in a public relations campaign to deal with the loss of brand equity through reputation management. This is something that may be covered by cyber insurance.
Cyber insurance is a definite necessity because of the extensive costs involved in recovering from a breach. As hackers become savvier, not having cyber insurance becomes a more significant risk.