Why your business needs cyber liability insurance

Cyber liability insurance protects you from the risks you face from relying on the internet, email, websites, computer programs, data, and storage of private and sensitive information.

It may seem like a trivial risk when cyber crimes seem to only effect the bigger companies, but statistics show that these criminals hit the smaller players more frequently as it's often quicker and easier for them to get a result. The truth is, big companies often take larger precautions to protect themselves from such attacks, making a criminals job much trickier. Small businesses are the cyber sweet spot for attacks.

Microsoft claims cybercrime now costs the global economy around US$500 billion (NZ$752 billion) annually and that 20 per cent of SMEs have been targeted by malicious actors.

There are 3 reasons why hackers commit cyber attacks;

1. For a political or social statement
2. Intellectual challenge
3. Financial gain

Cyber-attacks for financial gain is the mostly likely reason for an attack.
Once a cyber attack has taken place, criminals have three main avenues to generate income.

1. They breach your network & obtain personal information. This information is then sold on the ‘dark web’ to third parties who use the information to complete identity theft in order to undertake fraudulent activities.

2. Cyber-attack with financial demands. For example, your network is taken over & the hacker is demanding payment before returning your network.

3. Phishing scams. For example, invoice fraud.

As you can imagine, cyber attacks can be very costly to a business.

In 2015 the average cost to a business from a cyber attack was $276,323.

So who is at risk and who needs Cyber insurance?

If you say yes to any of the following, you or your business have a cyber exposure:

• Hold sensitive customer data
• Personally, Identifiable Information Protected
• Health Information Payment Card Information
• Are reliant on computer systems to conduct business operations
• Have a website
• Use point of sale software, for example EFTPOS

Basically, anyone who uses a computer, a mobile phone or iPad for work purposes can be a victim of cyber crime.

On top of this, the Privacy Act 2020 comes into effect on 1st December 2020. This Act introduces a privacy breach notification regime. What this means is if a breach occurs and it is likely to cause serious harm, the individual concerned, and the Office of the Privacy Commission must be notified. The costs associated with a breach could be substantial, including potential legal costs, contacting your database, regulatory fines, IT specialist to repair or patch your network.

But what if you are proactive with your online security now? Although it is always advisable to minimise your company risk with the right systems and software, it should be done alongside cyber liability insurance to ensure you are fully protected.

So, what does cyber liability insurance cover?

Immediate access & assistance (24/7) from Forensic IT specialists. These professionals charge out at around $400 per hour.

Additional key components include:

Losses and costs incurred by your business for:

• Loss of income Forensic
• IT costs Extortion costs
• Costs to restore the network
• Costs to replicate/replace lost data
• Public relations expenses to reduce potential reputational damage
• Liability to others (for example, this could be due to a privacy breach or an email from your network that causes disruption to another party)
• Regulatory fines and penalties
• Third party damages
• Public relations costs
• Forensics costs
• Claims for compensation from customers or other third parties
• Associated legal defence costs

For more information on cyber liability insurance, or to discuss whether your business is at risk, please contact our team.

Find out more:

There is a vast array of articles on the internet talking about cyber liability. Please find a link to a few articles below for further reading & examples.