If our federal government can get hacked, so can you.
The U.S. Office of Personnel Management admitted its databases had been breached. In other words, 4 million federal employee records were stolen.
As evidenced by other recent breaches at Sony, Target and Home Depot, all it takes is a single hack or virus to invade your business network and lead to a data breach that can cause immense consequences and financial implications for your company or organization.
While ongoing advances in technology and cutting-edge systems help businesses work more efficiently, go paperless and obtain greater gains, these innovations can also leave businesses of all sizes vulnerable to cyber liability and create new risk exposures.
Most small business owners are not aware that their traditional general liability insurance policies do not cover exposures related to cyber liabilities. Reports on cyber security breaches within larger corporations, major credit card companies, and even the Defense Department are frequently in the news, but rarely do you read about the same type of breaches within smaller businesses because those companies aren’t as newsworthy. But cyber liability can affect businesses whether they’re large or small.
According to the 2014 Cost of Cyber Crime Survey conducted by Ponemon Institute and sponsored by HP Enterprise Security, the average annualized cost of cyber crime incurred by a benchmark sample of U.S. organizations was $12.7 million, representing a 96 percent increase since the study was initiated five years ago.
The results also revealed the time it takes to resolve a cyber attack has increased by 33 percent during this same period, with the average cost incurred to resolve a single attack totaling more than $1.6 million. If a business is subject to cyber hacking, their cost to repair credit, discharge fraudulent loans and seek damages from emotional stress could cost hundreds of thousands of dollars.
A cyber attack can range from potential espionage to data breaches that lead to serious damage in reputation and consumer confidence. Any company that maintains a website, conducts business via the Internet, accepts payment via a website or stores nonpublic client and/or employee information within a network is susceptible to a cyber attack.
Today, technology firms and businesses of all types are being contractually required to maintain first- and third-party cyber liability coverage. In fact, many lawyers and accountants began strongly recommending protection against cyber attacks to their clients and clients’ vendors within the last five years.
Any sort of cyber liability coverage typically covers the business costs to fix the problem, notification and the monitoring (years of service), as well as identity theft and ruined credit. The biggest challenge is determining who the potential hacker is and what they’re after.
Companies can be proactive in preparing themselves for cyber attacks. With different flows of information and various devices in use, new holes are constantly being opened that can be hard to keep up with. It’s a balancing act of sorts determining how and why breaches occur: is it a case of internal vulnerabilities or sophisticated hackers?
Source: Daily Business Review