In today’s evolving business environment, safeguarding a company’s digital assets and online presence has never been more crucial. Yet, amidst the myriad cybersecurity acronyms, a vital aspect often escapes attention. Cybersecurity insurance plays a pivotal role in fortifying businesses’ digital terrain. Nevertheless, comprehending the complexities of the digital realm can be daunting. Considering this, let’s take a brief plunge into the realm of cybersecurity insurance and underscore the significance of protecting a company’s online information. What is cybersecurity insurance? Much like other forms of insurance, cybersecurity insurance is a means of protection from monetary loss in a worst-case scenario. While the hope is to never have to use the protection that is provided, it is important to have it if the worst-case scenario becomes reality. The Federal Trade Commission (FTC) notes there are two major kinds of cybersecurity insurance: First-Party and Third-Party Coverage. While both cover breaches, first-party coverage protects a company’s data, and thirdparty coverage generally protects from liability if claims are brought against a company. Some specific costs first-party coverage typically includes are legal counsel, recovery of lost or stolen data, customer notification and call services, lost income, crisis management, cyber extortion, forensic services and penalties related to the cyber incident. Third-party coverage typically covers the following: payments to consumers affected, claims and settlement expenses, defamation and/or copyright infringement, litigation, other damages and accounting costs. The specific type of coverage that is best for a company depends on a wide variety of factors, but having some form of cybersecurity insurance is better than not having any at all. Why should a business have cybersecurity insurance? Think of a company’s digital portfolio like taking a flight on an airplane. Even though it can feel like there are no risks involved, there is always the possibility of something going terribly wrong. Cybersecurity insurance is like a parachute. You hope that you never have to use it, but if you go on a flight without one and the worst-case scenario happens, you’d rather jump out of the plane with a parachute than without. Having some sort of a safety net in place is imperative. It won’t always protect a firm from everything they want it to, but it can help to make the recovery process more streamlined. IBM reported that in 2022, the global average cost of a cybersecurity breach was around $4.35 million. Regardless of the size of an organization, that level of a financial hit could prove to be catastrophic. If a cybersecurity breach happens, having some form of insurance can help to cover costs related to the incident. CYBER PATROL Matters of Policy By Raffaele Mautone 24 CHANNELVISION | SEPTEMBER - OCTOBER 2023 What SMBs need to know about cyber-insurance
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