The Importance Of Cyber Insurance

I’ve been in the cybersecurity industry for pretty much my entire adult life; it’s the only career I’ve ever had. And yet one of my favourite cybersecurity solutions to recommend to organizations is not even a solution I can provide for them. I’m talking about cyber insurance.

I got turned onto the concept of cyber insurance back in 2012 when members of an organization reached out to me once they had realized they were the victims of a cyber breach. It turns out the cybercriminals that hacked into this company’s systems ran a sophisticated social engineering scam — combined with a few other clever cyber tricks — and managed to steal $2 million from their victims.

The organization in question is a transportation company that fits into the small to midsize business category. The leaders of this company felt that due to their small size and seemingly non-flashy products and services, they’d never be a target for hackers. Unfortunately for them, they found out the hard way that cybercriminals don’t care whether you have flashy products or services. Ultimately, they look for potential victims who do not take their cybersecurity seriously, which creates an easy target for stealing data or, in this case, a huge sum of money.

As we began to construct a breach response plan, we learned that the client had something called cyber insurance. Although much more common now, cyber insurance was not as widely used back in 2012. And it’s exactly what you’d think it would be — cyber insurance is like regular insurance, except it’s meant to insure your company against the threats brought on by the digital age.

In the cybersecurity world, we have a very true and perhaps overused saying: “It’s not a question of if but when.” If you’re in the know, you know a breach is coming, and we preach cybersecurity preparedness and the importance of having an effective incident response plan, but prior to cyber insurance becoming more ubiquitous, the cybersecurity industry never really had a good answer for financial recovery after taking a devastating loss from a cyber breach — and I’m not just talking about stolen money or ransomware payouts. It’s important to remember that related costs, such as breach coaches, forensic specialists, negotiators, and legal and public relations professionals, may be more expensive than the actual ransom demanded or money stolen. Not to mention the expenses associated with business interruption, regulatory costs and liability.

As a cybersecurity professional, I preach (as many others do) the importance of “prevention, detection and response.” When it comes to your response strategy, a phenomenal tool to have in your solution kit bag is cyber insurance, as it is the only answer for financial recovery to a breach.

If your organization does not have cyber insurance, I highly recommend you reach out to the organization currently providing business insurance to your company and start the conversation to see if you can find something that works for you. If your organization does have cyber insurance, that is an excellent step in the right direction. Just remember that you need to be sure you understand what your contract covers and, more importantly, what it doesn’t cover.

In the event of a breach, you want to make sure you have questions like this answered well beforehand, along with questions such as:

• What PR firm will I reach out to for assistance to protect my brand?
• What law firm specializes in breach response?
• Who can help me with a forensics assessment?
• Which organizations specifically does my cyber insurance cover me to work with?

And while this may go without saying, I do get asked this question: “If I have cyber insurance, do I still need cybersecurity?” In short, of course, you do! During a cyber breach, you’ll be very happy to know you have cyber insurance and that you are covered, but ideally, you want to have good cybersecurity in place to mitigate that risk as much as possible. Even if you have health insurance, you still want to look both ways before you cross the road.