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Protection against Cyber Risks –Need of the Hour!

Monday, February 13, 2017

Technology plays very critical role in the world of business and for long has been leveraged as an asset, making businesses increasingly dependent on it. Today, with the demonetization of Rs 500 and Rs 1,000 in India, transactions over the internet are playing a key role in how most organizations conduct business and reach out to their customers. But, despite all the boon's IT has to offer, it also exposes businesses to risks which can be detrimental to their interests.

As business organizations become more reliant on the internet and advanced communications technologies, cyber risks, too, continue to evolve with the advances in technology. This has made businesses increasingly vulnerable to risks associated with theft, loss or misuse of data. In our country, where the controls over Information Technology are not entirely foolproof, many cybercrime incidences have been reported with confidential customer information being compromised. The recent incident, where the data of 3.2 million debit cards was compromised, indicates how vulnerable Information Technology can be despite the best security measures put in place. According to the National Crime Records Bureau*, there has been a 150% jump in the incidence of cyber-crimes or IT-related crimes in India from 2012 to 2014. A total of 9,622 cases were reported under the cybercrime offenses in 2014, 69% higher than 5,693 cases registered in 2013.

For corporates, the consequences of a cyber attack can have serious implications, which may either jeopardize operations or even bring down the company. Studies indicate that for every single data that is breached, the victim organization has to spend up to USD 200 on litigation and compensation. Therefore, organizations must proactively consider a plan on their approach towards cyber security, which includes insurance for all the assets sailing on the online space. This is where the value of Cyber Insurance plays a critical role for businesses.

What to look for as a cyber insurance buyer?
Just like any other corporate insurance, cyber insurance coverage varies depending on the insurer and the policy. Ideally, a cyber insurance coverage is made to protect businesses from the liability and expenses arising as a repercussion of theft or loss of data, as well as liability and expenses that may arise from the breach of data security or privacy, particularly when the company is hosting client information. Typically a cyber insurance policy will cover for:

  •  Impaired Access Liability
  •  Unauthorized access to, use of, or tampering with data
  •  Disclosure of confidential data (invasion of privacy)
  •  Loss of data or digital assets (malicious or accidental)
  •  Introduction of malicious code or viruses
  •  Cyber extortion or terrorism threats
  •  Personal media injury (defamation, libel, or slander) from electronic content
  •  Regulatory action, notification, or defense expenses
  •  Crisis management and public relations expenses
  •  Data or system restoration
  •  Business interruption expenses

As the first step, it is advised to create a cyber risk profile of your company by listing down the expenses that need to be covered in an event of a cyber breach along with an estimate of the third-party costs. It is a must before purchasing a cyber insurance policy that organizations build a mature information security program and most importantly, an understanding of the total cost of cyber risks.

With the constant change in technology, computer systems cannot be completely secured and the reality is that data breaches, most often, are beyond the organizations' control. But, cyber insurance provides the organizations' protection to limit their risk.
 

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