Companies around the globe continue to dedicate huge resources to safeguard and protect their sensitive information from cyber attacks and cyber criminals. Due to increased level and frequency of cyber attacks to most organizations across the world, they are currently necessitates to insure themselves with the insurance companies so that in case of loses they may be in position to cover their liabilities. As a result, there are various insurance coverage options for the companies various existing products which might be provided by the insurance companies to protect the valuable organizational assets from damage by the data crackers and hackers (Ahmad & Markell, 2016). It is fundamental for most organizations at the risk of cyber attacks to understand the fundamental insurance coverage which might apply in case the cyber attacks happen upon them. The organizations under the risks of cyber attacks must understand that they might occur in terms of data breaches. The work will demonstrate how the different insurance policies might be used to hedge against the recent cases of cyber attacks in most organizations.
Definition of Terms
Cyber attacks – An attempt to destroy, hack and damage computer system and network
Internet of Things –proposed internet development in which everyday objects are connected with the internet in order to allow data sending and receiving.
Insurance Policy- a document giving details of the insurance contract terms and conditions
Operational technology- Category of software and hardware that controls and monitors how the physical devices perform
Cyber Insurance- policies adopted by the organizations in order protect them from cyber attacks.
Data Breach-security incident in which confidential, sensitive and protected data is transmitted to the unauthorized users
The organizations’ information and data vulnerable to cyber attacks is constantly evolving with time. Although some hackers and crackers of the organizations data and information do engage in cyber crime and attacks for profit purposes, other do engage in the crime in order to cause fear and disrupt peace in the society. The modern operational technology and Internet of Things have played a critical role of encouraging individuals and organization to participate in cyber crimes (Zoogman, 2012). Hence, it has become the function of the organizations boards of directors and executives to adopt the cyber security approaches in trying to solve the supply chain risk, potential down time and product recall in order to avoid the supply chain risk. The cyber insurance policies usually vary from one insurance company to the other. Therefore, it is the role of every organization in operation to understand the kind of cyber crimes and risks it is likely to encounter during the operation before enrolling for an insurance policy to cover them.
The increased cases of data corruption, breaches and ransom ware in most organizations have necessitated them to look for means and strategies of lessening the cyber risks impacts. Despite the fact that there are numerous strategies which have been adopted by organizations to hedge them from cyber crimes, it should be understood that there is nothing like absolute cyber security in the modern times. As a result, insurance companies have realized the cyber security gap hence the need for them to provide these organizations with the cyber security and privacy insurance policies (Goforth, 2015). The fact that the cyber crimes have evolved, the insurance companies have been necessitated to adjust their insurance policies in order for them to be in line with the cyber attacks against these organizations. The modern cyber attacks against organizations have moved from being purely technical process to more governance related exercise. The risk management process has necessitates the insurance organizations to speed up the process of insurance policy implementation in order to avoid the risks and liabilities associated with cyber attacks.
The privacy insurance and cyber security policies usually covers direct costs associated with the security breach such as business interruption, investigation and notification costs. The insurance policies might be adopted by the organizations in order to cover the organizations’ damages and liabilities cause by the clients. In order for the organizations under the risk of cyber attacks to buy the appropriate cyber insurance policy they are required to understand the risk management strategy and profile (Blowfield & Frynas, 2005). The insurance policies adopted by the organizations usually protect them from: Notification costs, forensic investigative costs, business interruption, crisis management expenses, data restoration costs, cyber extortion costs, regulation proceedings, Network security liability, privacy liability and internet media liability. In addition, although these are just some of the basic insurance policy coverage, the social engineering fraud, reputation harm, privacy policy and cyber liability might be addressed by the insurance policies adopted by the insurance companies.
As a matter of fact, each organization is unique in its own way and much of its cyber risks and the risks in general might depend on the kind of the information the organization holds, how it engages with its clients and how its operates in the economic environment. The appropriate cyber insurance solution for an organization shall depend hugely on how clear the organization is having a clear understanding of its risk profile. In the new cyber world, one size fits all strategy in fighting the cyber crime attacks would not work. Having a risk management strategy is vital for the organization’s future success (Goforth, 2015). Prior to the organization obtaining the insurance policies to cover themselves from the cyber attacks and risks it is important for them to establish the policies appropriate in covering the risks. The dramatic increase of data breaches in most organizations across the globe has necessitated them to adopt strong response from the insurers, policymakers and consumer groups.
According to the experts, the frequency of the reported organizations data being breached seems to be increasing drastically. As the insurers continue to depend on electronic data transmission and Internet based services internet based services, their exposure to cyber risks and attacks increased. Data breaches in organizations normally differ in their traits. Some organizations data breaches usually involves deliberate intention of stealing of the personally information for the purpose of committing fraud. Data storage is an aspect that makes data breaches extremely important for the insurers. The insurers must be concerned with the security strategies used by their vendors (Goforth, 2015). The insurance companies’ data breaches have been received with different reactions from the various insurers. Data breaches have also necessitated various countries to change their insurance procedures and policies for preventing the future data breaches. Data breaches may be time consuming and expensive for both the individuals and firms impacted by the data breaches. The time and cost of recovery from the data breach vary according to the circumstances of the breach. Due to the changes in law and new rules evolvement the data breach recovery is like to change.
Although most organizations are committed in controlling the data breaches it is still hard for them to estimate and quantify the ultimate costs of organization data breaches. In fact, there are damages which might be caused by individuals working for the organizations and they fail to hold the individuals liable for the damages caused. However, the data breach damages for most organizations may include: credit monitoring services, lost wages and identity insurance theft. In addition, data breach in organizations may result into productivity loss, penalties, fines and court suits from the affected parties (Blowfield & Frynas, 2005). Despite the fact that the organizations might have insured themselves from the data breach costs and liabilities, the insurance companies might fail to cover large portions of data breach associated costs such as loss of the organizations’ reputation, priority information, trade secrets and the negative impact of the stock prices . In the past, organizations expected minimum data breach suits which would be litigated since the federal resources were limited and many states had not yet allowed private right of action after data breach. Recently, litigation after data breaches has become familiar in exploiting their private rights of action. The common proposed federal legislation for addressing data breaches in most of the modern organizations may include: data security breach notification, fortify and secure electronic data, data breach notification and personal data protection and breach accountability Act of 2011.
Insurers from the various industries and organizations have responded to the aspects associated with privacy breaches in different ways. As a result, some insurers have become leaders of the organizations privacy protection. Due to the financial costs associated with the data breach, the insurers have realized the need to adopt a variety of insurance products in order to minimize the potential impact and costs associated with data breach. Apart from the risk management strategies, both the insurers and non-insurers have a variety of insurance policies which they might use to reduce the potential costs associated with data breaches (Bragge, 2006). As a matter of fact, secure insurance coverage for addressing the data insecurity is fundamental in preventing the losses for the organizations. Basically, organizations using outside consultants to prevent and hedge the organization from data breaches have lower overall costs. Most organizations fail to obtain insurance policies at the right time because of: inadequate information by the firms in regard to the insurance coverage, underestimation of the organization’s exposure to data breach risks and fear of insurance policy costs. Moreover, organizations risk management solutions such as strict policies related data security practices vendor and internal data security might discourage the firms from obtaining or purchasing insurance coverage. Despite the organizations decline to obtain insurance coverage, cyber insurance still matters in the modern time. The fact that the magnitude and frequency of the data breaches in most organization have necessitated the organizations to secure their sensitive data from data breaches.
Based on the industry that an organization operates in, it must decide the appropriate insurance policies that it should adopt in order to avoid data breaches and the associated costs. Understanding the legislative and legal environment surround privacy breaches is fundamental for the insurers in developing the insurance products for the emerging market place and risk management guidelines (McCullough & Gatzlaff, 2012). In case of cyber attack, it is important for the injured organization or individual to notify the insurance companies. It is the responsibility of the company personnel to work as a team in ensuring the relevant data that led to cyber attack in order to provide the appropriate insurance policy to solve the data breaches. Prior to the organization obtaining insurance policies it is important for them to involve the technology managers, risk managers and insurance managers in order to ensure that the right insurance for the organization is obtained.
In conclusion, there are different insurance policies which might be used by various organizations to hedge themselves from cyber attacks such as data breaches. The fact that most insurance companies would be resistant in covering most of the cyber attack and crime, it is important for the organizations to take the insurance policies with a lot of tender care. The value of the insurance policies in the modern times of data breaches, cyber risks, cyber attacks and hacks might not be under estimated.
References
Ahmad & Markell, (2016). Cyber security and privacy insurance. Fraud Prevention Institute for Employee Benefit Plans Journal. Vol. 1, Pp. 8-10.
Blowfield & Frynas, (2005). Editorial Setting new agendas: critical perspectives on Corporate Social Responsibility in the developing world. International affairs.
Bragge, J.(2006) A repeatable e-collaboration process based on think lets for multi-organization strategy development. Oxford University Press.
Goforth, A. (2015). Brokers respond to boom in cyber security demand after Anthem Hack. New York Publishers.
McCullough &Gatzlaff, (2012). Implications of privacy Breaches for Insurers. Insurance Regulation Journal. Vol. 46, Pp. 198-216.
Zoogman, J. (2012). Insurance Options: Cyber attack. Retrieved from: www.fiancial executives.org
