There has been an increased awareness in the business community over recent years regarding the importance of cyber insurance given the prevalence of cyber crime in Australia. Recently, cyber insurance has become even more important due the cyber risks which have emerged in the face of Covid-19, largely due to the sudden requirement for employees to work from home during these unprecedented times. These risks have cemented the essential nature of cyber insurance to protect against the financial impact of a cyber security breach.
Cyber insurance explained
Cyber insurance is designed to protect businesses from the financial losses associated with cyber attack and other technology related risks. This includes losses to your business or third parties following a security breach. It’s important to remember that cyber crime doesn’t discriminate and can target businesses of all sizes. Third party data is valuable to many cyber criminals and in an increasingly digital age, the business community is vulnerable to security breaches.
Covid-19 and the increase of cyber risks
It should come as no surprise that Covid-19 has meant an increase in the risks associated with cyber crime for Australian businesses. The sudden spread of the global pandemic has meant that employers have had to put working from home arrangements into place very quickly, often without sufficient time to consider the impact from a security standpoint. Working from home arrangements have also meant an increase in cloud based software which is often an attractive target for cyber criminals. Many businesses have also become digital with online shopping options in response to retail restrictions which has come with a new set of security challenges with issues such as the secure storage of customer data.
Just some of the potential cyber security issues that businesses could face during the Covid-19 crisis include ransomware attacks, fraudulent spam schemes, and phishing schemes. Would-be cyber criminals are also aware of the less secure home networks used by many employees and can target these vulnerable parties.
What cover does cyber insurance typically offer?
There are a number of situations that cyber insurance can provide cover for, including:
- Loss of revenue due to interrupted business;
- Crisis management and monitoring;
- Theft, hacking and denial of service attacks;
- Failure to safeguard data;
- Defence of legal claims;
- Misuse of intellectual property online;
- Liability following loss of third party data;
- Hiring investigators;
- Copyright infringement;
- Recovering or replacing records or data;
- Public relations costs.
The cover you require will depend on the needs of your business and your broker will be able to arrange specific cover for your unique cyber risk exposures. It’s important to consider all of your cyber risk exposures, particularly with the increased risks which have developed as a result of Covid-19, so you have the right level of cover in place.
The impact of Covid-19 on cyber insurance
Covid-19 has meant an increased demand for cyber insurance as businesses become more aware of their own digital vulnerabilities. However, it is likely that insurers will respond to the increased risk of financial disruption due to cyber attack by ensuring that businesses they insure have an appropriate cyber risk management strategy in place. We can expect to see a more proactive approach being taken by insurers in relation to educating their policyholders on potential risk exposures to vulnerabilities can be addressed. This could include measures such as ensuring that remote access is secured correctly and that there are appropriate firewalls and other cyber security measures in place. While the popularity of cyber insurance will undoubtedly continue to grow, so too will the business community’s awareness of cyber risks.
For further information about cyber insurance, contact your insurance broker today.