You Lose More Than Data with Data Loss

Cybersecurity is more important than ever, especially when it comes to the issue of data loss. With a single hack, businesses can lose a ton of precious data. But what does that mean for your business?

Data loss is more than simply losing client information and trade secrets, though those things would already be a big issue for a company. This article will discuss the true costs of data loss that people don’t always consider. Additionally, we will discuss what you need to do to prevent data loss in the future (even if you’ve dealt with it already). You never know if and when another hack can happen, or when an employee can make a mistake. It is best to be prepared and take preventative measures to protect your data to minimize the threat to your business.

What is the actual cost of data loss?

In 2018, one study found that the monetary cost for data loss was approximately $3.6 million. This is close to $141 per data record. Data loss can be very costly, no matter how much data is lost, and the costs continue to rise. In 2019, the cost related to data loss had reached nearly $4 million on average worldwide, and in the United States alone, the costs are double the global average. The increase in costs raises alarms for businesses, making many people question whether or not their current cybersecurity protection is up to par. 

As hackers continue to become more creative in their tactics and attacks against computers (both commercial and residential), the cybersecurity industry has the opportunity to try and stay one step ahead of the bad guys. 

Plus, these hacks can be more devastating than previous attacks. That alone can lead to more costs (and the figures continuing to rise). That is why businesses need to take necessary precautions in protecting data. 

However, data loss is not only linked to cyber attacks. It can be caused by other incidents that may be beyond human control.

Aside from cybercrimes, there are some risks and hazards that can cause data loss. Some of them are beyond human control.

Here are a few examples:

• Human error: Yes, human error is one of the largest risks and hazards of data loss outside of cybercrime. Specifically, two major factors are accidental deletions of specific files or a lack of competence. Unless backup measures are implemented, there would be no way of recovering any of the lost data.

• Natural disasters: Depending on the data center’s location, there is the threat of natural disasters. These include tornadoes, hurricanes, earthquakes, and many more. Any data area that lives in an area where they are vulnerable to natural disasters should have backup measures in place, just in case something happens. It’s challenging to predict when and where the next major natural disaster will happen. When it does, a data center could be affected by it. Thus, data loss can become a certainty if nothing is done to prepare and prevent it.

• Outages: Unexpected outages have been known to cause data loss. In the United States, a business could lose almost $8000 per minute. That’s nearly half a million dollars in a single hour. Such outages and data loss could financially cripple an entire small business. This is one more reason why backing up critical data is the best course of action compared to never doing it at all.

• No access to data: If you are unable to access the data, it can lead to the loss of data itself, as well as time and money. Without access to the data, a business’s productivity will suffer. Plus, the costs will be higher. Depending on the size of the business, they can stand to lose anywhere from tens of thousands to well over a million dollars in one hour alone.

Needless to say, money won’t be the only thing that data loss will cost your business.

Here’s what you could stand to lose in a situation with data loss:

• Lost wages: Employees won’t have the ability to work because of how dependent your business is on data. Thus, they’ll have nothing to do. You send your employees home, and they don’t get paid because they won’t be able to work. This could hurt employees who are paid at an hourly rate.

• Productivity is halted: As mentioned before, your business may be dependent on data. It might be the fuel it needs to ensure that productivity continues. Without it, there is no work to be done. Because of its need for data, there are apps and systems that will stop working if there is data loss. With a stoppage in productivity, the costs begin to stack up. As the clock goes, so goes the money in the bank.

• Lost revenue: Because of data loss, productivity will stop, and the work won’t get done. This means that your business won’t be able to take and process orders, or will not be able to provide the promised service. When this happens, you will lose revenue instantly. No sales are made, and no orders will go through. Even though no money will be able to go in, money will always find a way out by way of your business expenses, employee wages, and so on.

• Potential fines: This will depend on the industry that your business may be in. Some industries have to take data handling even more seriously than others. Failure to do so can lead to fines (and perhaps even more serious consequences). The fines and penalties may range per record. One business in the financial industry could lose millions of dollars in fines alone due to its failure to protect sensitive data. The healthcare industry could also be fined for potential violations of HIPAA.

• A loss of trust and credibility: Customers and clients want to have the confidence in knowing their data is safe. If there is a data loss, that confidence will drop. Clients may lose trust in you because you didn’t do enough for data protection. Regaining trust and credibility will be a challenge for any business that has dealt with loss. This and trying to recoup their financial losses go hand in hand.

As such, preventative measures should be taken in order to prevent future data loss. Yes, you can prevent it to an extent. However, there are risks due to incidents beyond anyone’s control (such as natural disasters and outages).

Let’s take a look at what you need to do in order to minimize such instances:

• Backup data regularly: This is self-explanatory. And a must-do task for any business that is handling amounts of data, small or large. Find a program that will allow you to back up data on a regular basis. This includes cloud services that will back up your data for a monthly fee (which can be higher depending on the amount of storage space you want). It may be an expense, but it can be one that will save you money and a ton of headaches just in case of disaster.

• Hire people who are competent in data handling: As mentioned before, human error is one of the more significant causes of data loss outside of cybercrime. For this reason, you must find people that will handle your data with care. They need to be knowledgeable and competent enough to handle it (and know what not to delete).

• Test your cybersecurity infrastructure: It’s important to test what software and systems you have in place to protect your business from cybercriminals. You’ll want to have a cybersecurity specialist perform penetration testing. They’ll try to find vulnerabilities that exist and seal them off from attacks if any are present.

Other than that, there is no way to prevent events beyond our control. We cannot predict the next outage, nor a major disaster like a tornado or a hurricane. That’s why it’s good to backup data and make sure it’s accessible anywhere else instead of having it all situated in one central place (like your office).

If you can find a cloud service that allows you to access data from anywhere in the world, you will have no trouble keeping your business data safe. Don’t take any chances keeping data in one single place, such as extra hard drives and computers.

Cloud data services need no physical hardware for storage on your end. All you can do is access it from a computer so long as you have the right credentials.

What is the difference between data loss and data leaks/breaches?

Data losses are when incidents occur leading to the loss of data. It can be either misplaced or lost to the point where it can never be retrieved. Meanwhile, data leaks or breaches are when information is accessed by cybercriminals and successfully stolen.

Either way, they are costly occurrences that can cost businesses a ton of money. Even if there is data left to be recovered, your business could lose money for time and productivity lost. Regardless, prevention of these occurrences is your best line of defense. 

Frequently Asked Questions

What was the average cost for data loss in 2021?

In 2021, the average cost of data loss was $4.24 million worldwide. This was nearly a 10 percent increase from the previous numbers reported in 2020.

How much can recovery from data breaches cost?

Data breaches can occur and will not result in significant data loss. However, the recovery process can be just as costly. Data breaches can cost a business a total of $2 million. That figure can differ depending on the business’s size or the industry they are in.

How much will ransomware cost businesses?

In a 2021 report, cybercrime will lead to losses of more than $10 trillion worldwide. This also includes ransomware attacks, which may account for nearly $20 billion of those losses within the next year. The costs can vary from one industry to another. But collectively, the costs will add up.

Cyberattacks worldwide happen at least 2200 times per day. By these numbers, a cyberattack will occur every 39 seconds. That’s why it is essential to protect the sensitive data your business handles on a regular basis.

Why are data breaches so expensive?

The COVID-19 pandemic and the increase in remote work may have played a role in the increased cost of data breaches. Remote work may have led to slow response times, thus leading to increased costs – including nearly $750,000 alone to respond to cyberattacks and data breaches alone.

What was the most expensive data breach in history?

The most expensive data breach in history was Epsilon, which lost $4 billion in 2011 after a cyberattack. This affected many of their clients, including several large brands like JPMorgan, Chase, and Best Buy.

Final Thoughts

Your business may be at risk for potential data loss. That’s why it is important to follow any possible security measures to protect it from cybercriminals. Also, backing up such data on a regular basis is essential.

Occurrences beyond your control can lead to data loss if it isn’t backed up. That’s why you want to consider backup tools that rely on the cloud. You get plenty of storage space, and you can keep it safe regardless of what happens to your business’s technological infrastructure.

Don’t take any chances. Make sure everything is safe and protected so you can have peace of mind knowing your most sensitive data is safe.

Small Businesses Should Take Steps to Protect Themselves

Cybersecurity in our digital age is something people and businesses need to be wary of constantly. However, many small businesses do not take the proper steps to protect themselves and their customers. On average, only about 14% of small businesses take the time and effort to use cybersecurity and protect their computers and software from cyberattacks. However, almost half of all cyberattacks are carried out on small businesses. We will discuss what cybersecurity is, the top four cyberattacks to be wary of, and preventative measures you need to take to protect your businesses and your customers. 

What Is Cybersecurity?

Cybersecurity is essentially the way that companies, websites, and people protect online data and devices from harm or theft.

Using cybersecurity to protect a business is not an easy task. Each form of protection needs to be tailored to the business and encompass all devices and systems. This includes your internet connection and even your employees.

Cybersecurity is also not a one-and-done application. Your cybersecurity must be frequently upgraded and adjusted as the internet grows and new scams are created to fully protect your business. 

What Are The 4 Main Types of Attacks?

Malware

Malware encompasses a broad spectrum of cyberattacks. Basically, any software created to hurt part of your digital system.

 Some of the most common types of malware (not including ransomware) are:

• Trojans: Malware that appears to be a helpful code in your system
• Keyloggers: A program that tracks keystrokes on a computer or device
• Spyware: Collects data
• Worms: It replicates itself and spreads through the network.

Malware can get into computers due to untrustworthy emails, downloads, or even items plugged into your computer like phones or USBs. Even if a software is trustworthy, it may be bundled with a suspicious line of code or application that can release malware. 

Ransomware

Ransomware is a form of malware that occurs when a hacker locks files, programs, or data. Generally, as the name suggests, a hacker will demand payment before rereleasing the information to the company. However, there is never any guarantee that the data will be returned after payment is complete.

It can be almost impossible to recover data that is collected this way.

Ransomware can be spread through unprotected Wi-Fi, emails, links, downloads, or dangerous websites. However, suspicious emails are the most common. 

Social Engineering

Social engineering attacks are often overlooked when setting up security on your data. This is because it involves social interactions and not necessarily any bots or programs on the computer itself.

The people who instigate these attacks try to convince a business or person to break usual security measures to access software or data. This can be due to dangerous emails opened, suspicious links, or some other simple mistake. They can also play on an employee’s or even your own emotions.

In 2019, these social hacks made up over 90% of all reported scams and data breaches. 

Phishing

Phishing is a social engineering attack that usually involves a hacker pretending to be someone else to get money or sensitive information. This may be someone official, such as a member of the IRS, or just a friend or coworker.

The hacker will send an email, text, or message through a social media account of someone, and they will ask you to send money. They could pretend to be a friend asking for it as a favor, or pretend to be from the IRS,  or that something was handled wrong on your taxes and they need more information. 

Why Are Small Businesses More Vulnerable?

Constantly updating your cybersecurity and training staff is costly. Small businesses often don’t have the funds to integrate top-of-the-line cybersecurity measures and keep them upgraded as more programs and cyberattacks come out.

This makes it easier for hackers to target small mom-and-pop businesses over large corporations such as Google. While these big companies can still be attacked, it is more challenging to get through their security than it would be for smaller businesses. 

Many small businesses are also vulnerable as they don’t even bother to protect their data. Up to 82% of small businesses don’t even set up real security measures as they don’t believe they are at risk or worth being hacked.

However, Visa said that most credit card breaches, well over 90%, come from small businesses. This could be due to their lack of security. So not only can hackers access your financial information, but that of your customers as well. 

Cybersecurity measures cost a lot of money. However, an attack from a hacker can put you out of business. In 2020, 43% of all cyberattacks were on small businesses. Of those attacked, 60% went out of business within six months of the attack. 

It is estimated that small and medium businesses lost over $2.2 million to cybercrimes. Estimates say that even figuring out where the attack came from could cost over $15,000.

Not only does a lot of money come out of your pocket due to paying hackers and trying to mitigate current breaches, but you may also lose customers. Once customers find out that a leak of their information came from you, they may be hesitant to return to your store.

So not only are you spending thousands to hundreds of thousands of dollars to repair an issue caused by a cyberattack, you are losing the people that can help your business offset that cost. 

This is why it is so important to set up preventative measures early. Upgrades and training might cost a lot of money, but it is worth it to ensure your customer’s and business’s safety. 

How to Prevent Cybersecurity Risks

Proper training of your employees is the first step. With social and phishing attacks being the most common, it will likely be human error that causes the issue in the first place. For this reason, you want to make sure all of your employees are trained on procedures and guidelines.

How to Avoid Cybersecurity Risks

Here are some key tips to consider when implementing training for your employees:

1. Keep the business Wi-Fi separate, secure, encrypted, and hidden. Having your public and business Wi-Fi the same makes it easy for hackers to access your information. Instead, make sure the credit card machines, personal data, and private information are used on a separate Wi-Fi encoded and hidden to protect any device that uses that router.
2. Create an account for each employee and control access to your computers. If an employee has to walk away for some reason and leave the front computer open, it is easy for a hacker to get the information they need. Laptops, especially, are easy to steal, so make sure they are locked up when not in use. However, adding employee passwords and logins to important programs and data reduces the likelihood of that data being stolen.
3. Limit how much data employees can access. There is no need for one employee to have access to your whole system. Ensure an employee can only access the information pertinent to their job and not install any new programs or software without your permission.
4. Revoke employee abilities as soon as an employee is fired or quits. It is best to ensure that an employee’s login information no longer works as soon as they are fired or quit. This is to prevent any disgruntled employees from collecting or ruining information.
5. Multi-level passwords and authentication. By changing passwords every three months, you reduce the risk of the information being stolen. Also, adding another level of security through a two-step login minimizes the risk of anyone gathering information from an employee’s login information. 
6. Constantly upgrade all of your software. If your software and programs aren’t up to date, they can quickly be targeted by malware or hackers. Keeping your programs up to date means you have the most effective software and tools to fight against cyberattacks.
7. Train your employees. It is crucial to ensure employees know not to give away any personal information or data to anyone, no matter who they claim to be. Teach them not to open or download any suspicious files, emails, links, or texts, even from someone they know. Not only is it important to follow this on the company devices, but even their own devices can cause a leak in the business if they aren’t careful. For this reason, it is essential to inform and update employees on ways to prevent cyberattacks.

It is also important to have a plan or person in place to help mitigate the issues when they appear. For example, if someone is attempting to hack you, it is good to have a person or team dedicated to being able to help you prevent the issue. 

Signs of cybersecurity risks include:

• A slow computer
• Fast battery drain
• Unfamiliar apps or programs on your device
• Deleted files
• Contacts receiving strange messages that say they are from you.

There can also be warnings when someone is trying to steal your information that is important to look out for.

• Someone attempting to change passwords without authorization
• Multiple login attempts without success
• Large data transfers to an unknown location, USB, or IP address

The most important part of detecting security risks is being aware and vigilant. The sooner you can recognize and catch anything strange on your devices, the quicker you can prevent any cyberattacks. 

What to Do if Your Business Is Compromised

If your business is compromised, it is important to act quickly. The first steps are to determine what information was gathered and inform your web-hosting service and any other program, website, or software you use to let them know the hack has occurred. They may be able to take steps on their end to prevent the issue from going any further and might even have an idea of how to help your business.

The next step is to inform your customers. It might be scary and seem easier not to inform them. However, you should provide written notification to let your customers know what information was taken and how this might affect them so they can be prepared. This not only allows your customers to take steps to protect themselves early on but is likely to keep them willing to come back to your business as they know you can be honest and trustworthy.

During this process, it is important to be transparent as well. Even if you are embarrassed about how the information got leaked, give as much information to the authorities, legal teams, and anyone else that is trying to help you, so they know how to prevent hacks such as these in the future. They can also help you close up the leak and maybe even get data back.

Finally, once the leaks have been dealt with, it is important to update your security. You know what caused the leak, and you can focus on upgrading the software or employee training to prevent such issues from happening in the future.

Scams and cyber attacks can happen to anyone, even large companies that can afford the best security. It is important to move as quickly as possible and be honest so that the damage can be mitigated. Being embarrassed or upset and trying to withhold information will only hurt you further. 

Making time for training, having a dedicated team or person to fight against hackers, and having the most up-to-date devices, programs, and software can be expensive. However, with over half of small businesses that face a cyberattack going out of business within six months of the attack, it is worth investing in these preventative measures.

Social attacks and human error are the easiest ways for scams and cyberattacks to work. It is best to focus on training your employees and reducing the amount of information each employee has.

Almost everyone faces some sort of cyberattack every day, even if they don’t realize it. If you are faced with a cyberattack, it is important to remember to act quickly and be honest and upfront with any websites, companies, or officials trying to help you, as well as your customers. Cybersecurity can be intimidating, but by focusing on your employees, you can mitigate many attacks easily.

Are you concerned about the cybersecurity of your company? Edge Networks can help! If you’d like to find out how your company is performing and isolate weaknesses in your cyber defenses, schedule a call with us or take our free, self-guided IT Security Risk Assessment . 

In the digital world, threats come from everywhere. Most organizations are prepared to combat hackers and scammers from the outside. However, not everyone knows what to do when the issue comes from an internal location. Internal threats are one of the many security issues that plague organizations today. It’s critical to be proactive and know where they come from and how you can prevent them from interfering with the structure of your business. 

We’re here to help you understand what an internal threat is and how you can combat them. Read on to learn more about this growing challenge in the business world today.

What is an Internal Threat?

So, what exactly is an internal threat?

An internal threat is a hazard that comes from the inside. Internal threats are often people who already have insider information about the company, such as former employees or negligent workers. It may happen on purpose with the intent to harm or may occur on accident from someone who doesn’t take the time to keep critical information on lockdown.

Internal threats target computer systems, data, and even security practices. You can be well-equipped for an external threat and find you have nothing prepared for something on the inside. That’s why it’s critical to prepare, even if you feel like it won’t happen to your organization.

The first step to combating an internal threat is knowing where they come from and what one could look like in your organization. This knowledge will give you a foundation to build on. Of course, internal threats can vary depending on the business structure you currently have in place and the type of company you run.

So, what are some examples of internal threats? It can be tricky to understand them without scenarios. Let’s talk about a few examples of internal threats you may want to look for in your employee structure. These should give you a better idea of what to look out for if you suspect an internal attack is occurring in your business.

Some examples of internal threats within a company include:

• Ex-employees: A disgruntled ex-employee may feel the need to damage the company from the inside, giving up valuable information or leaving something vulnerable to the outside.
• Employee theft: An employee could steal items like a hard drive with vital data.
• Employee negligence: A negligent employee could click on a dangerous link or accidentally give out vital information about the organization.
• Employee abuse of privilege: An employee could abuse their access and use company information to take advantage of the system.

An internal threat doesn’t have to come from someone working for the business. The person needs to know the specific information that gives them access to certain aspects of the company that could lead to something extreme.

To mitigate internal threats, you must be proactive when dealing with issues from the inside. Acting sooner rather than later can reduce the damage done after an attack. It’s excellent to know what to look for, so you can be on alert rather than taken by surprise. 

When dealing with internal threats, it’s important to be proactive. Take precautionary measures beforehand to ensure you have an eye on everything while simultaneously being ready to deal with any internal threats that may arise. An intricate, well-run system will accomplish this best.

To be proactive in mitigating internal threats, you can:

• Establish an insider threat program
• Know your people
• Document and enforce policies
• Allow surveillance
• Utilize strict password management

These will keep your insider threat risk down to a minimum and help you better locate the source of the trouble when it arises.

Let’s dive further into these to better understand what needs to be implemented. There are many ways to mitigate and keep internal threats under control, even before they become an issue.

First, we’ll talk about establishing an insider threat program. This technique is not one that many think of, but it can make a difference when dealing with internal threats.

Establish an Insider Threat Program

First, establish an insider threat program that can take action when an internal threat arises. This choice means putting people in place tasked explicitly with handling internal threats that may rise to the surface. They are specialized in their jobs and only need to worry about this one task every day.

To establish an insider threat program, you should:

• Find a senior official to take charge
• Create a working group
• Create governance and a working policy
• Form a training program
• Derive an office for this program

Having a team to deal with internal threats protects your organization and gives you peace of mind as you go throughout your workday. Formal training permits your staff to be aware and ready to prevent mistakes from leading to an internal threat.

An insider threat program will act on instinct when the time calls for them to do so. They can also analyze specific behavior within the company to keep internal threats from arising before it’s too late. Having a team on your side will make life a whole lot easier for your place of work, as they can take on threats while you deal with the day-to-day of the team you work for or with.

Know Your People

Know your people. Know what they do, know who they are, and know what position they have in your company’s security. You should be aware of various people’s access to specific systems and their control when inside — knowing who can go where will make it easier to retrace your steps if something goes wrong.

On top of this, you should also train your employees in internal threat combative techniques. Teaching them anti-phishing strategies will reduce the number of accidental pawns utilized in an internal threat. It’s too easy for employees to become victims in the world, which can lead to the downfall of a business. Ensure your employees aren’t like deer in the headlights.

You can also show your people how to look for risky behavior. If they notice it among their fellow workers, they can report it to stop it before it goes too far. Having watchful eyes among equipped employees will take you far in mitigating internal threats.

Document and Enforce Policies

Quality policies will go a long way in mitigating internal threats within your organization. It’s critical to document them, taking care to write them down and store them for safekeeping. There should be policies about all employee interactions you can think of that could lead to the scenario of an internal threat.

Netwrix.com recommends some of the policies to be about items such as:

• Third-party access policy
• User monitoring policy
• Incident response policy
• Password management policy
• General data protection regulations

Ensure your employees know about these policies and are familiar with how they work. It would be best to be firm on enforcing policies to avoid any loose-handedness that could come with being lax on enforcement. Every policy must be verified by a legal department and then signed by the CEO

You’ll also need to develop penalties if any policy is broken. Strict penalties result in a safer system. Ensure these are just as clear to your employees as the policies are to avoid any confusion.

Next, ensure you allow surveillance to happen on your systems. There’s a way you can keep an eye on potential security threats without damaging the company’s privacy as a whole. Surveillance can take many forms when you’re working to mitigate internal threats while ensuring your company continues to run like a well-oiled machine. 

Some examples of surveillance within an organization might include:

• Utilizing employees to monitor, look for, and report suspicious behavior
• Installing video cameras and motion sensors to operate at night
• Implementing screen-capture technology on screens that are considered high-security.

These measures will keep your systems safe from internal threats.

 On top of these three measures, you should download various security software to do some of the work for you. The more sources of defense you have, the better equipped you will be to keep out intruders that do not belong in your system.

Finally, take care to utilize strict password management measures with your system. This step is perhaps one of the most critical since passwords safeguard almost everything a business offers. Not only do you need to make strong passwords, but you also need to be careful who has access to what.

 Each user in your system should have a way to log in that is personal to them, and only them. If they have clearance to a higher program, they should have another unique password that allows them into that system. Follow the password policies and management you have set to keep everything in place. 

One of the biggest causes of internal threats is the verbal transfer of passwords from one person to another. Ensure your employees can keep their information to themselves and be ready to enact repercussions if security measures break. Passwords can be the downfall of security fast.

What is the Most Effective Strategy for Combating Internal Threats?

Out of everything we’ve listed, what’s the most effective strategy for combating internal threats? There is one that stands out above the rest when dealing with issues that may arise.

Having policies in place and trained employees is your best course of action against the dangers of internal threats. If everyone is aware of the potential threats, they are better equipped to prevent them from happening. They can also report anything they see right to you for efficient action. 

If everyone is on board, you have less to fear. Together, you can work on making your business environment one that is safe from employee negligence and other careless actions.

Why is it Critical for Companies to Take Action Against Internal Threats?

It can seem unnecessary to take action against internal threats. You may feel as though your system is covered, as though you have no chance of dealing with an internal threat from your organization. This is where the problem lies. Many aren’t aware of the statistics that plague businesses around the world.

According to purplesec.us, 63% of successful data attacks come from sources on the inside. This statistic is shockingly high, and many companies are unaware of it. Much data isn’t reported due to the inside nature of the attack. This choice leaves many organizations in the dark about their actual risks.

Because of the unknowns that come with internal threats, it’s vital to take action against them regardless of how good you feel your security may be on the outside. You never know where an attack can come from, and it’s better to be prepared than not know what’s going on when one happens. Don’t become a statistic with a system ready for an internal threat to conquer.

Internal threats can seem like they’re not a problem until they arise and destroy your system. It’s critical to understand what internal threats are, who they come through, and what you can do to mitigate the issues before they get any bigger. Internal threats are a much larger issue than many realize.

Combating and being proactive against internal threats is part of running an organization. With the increased dangers of social engineering strategies, it’s more critical now than ever to be on top of any threats that may come your way. With extra effort, you can prepare for any internal threats that may come your way.

To assess your risk of internal threats, as well as any other cybersecurity threats, contact Edge Networks for a free 30-minute consultation.

Everything You Need To Know About Cyber Liability Insurance

The world today is becoming more and more digital. We communicate, keep records, even buy and sell goods and services online. All that data being stored online means more opportunities than ever for cybercriminals to hack into and access systems they shouldn’t. Cyber security measures are more critical than ever. That includes having cyber liability insurance.

In this article, we’ll cover everything you need to know about cyber insurance, including what it is, how it works, and what it does and doesn’t cover.

Ready to learn more about cyber insurance and whether it’s right for you or your business?

Let’s dive in. 

What Is Cyber Liability Insurance?

Cyber insurance is usually offered to businesses rather than private individuals, though in some cases, it may have value for individuals as well. The primary purpose of cyber liability insurance is that the plan helps your business recover from the effects of a cyber security breach, including helping provide resources to track down and isolate the breach and paying out for lost income because of a breach. Many policies also help cover the costs of legal fees or lawsuits against your company that happen because of a cybersecurity breach.

Some cyber insurance companies also offer additional services to their customers, such as cyber security consultations or monitoring. Usually, those services are separate from the policy itself and come at an additional cost to the consumer. However, since they can help prevent the damages caused by a breach, these cybersecurity services are worth considering.

Good cyber insurance will cover just about any liability you incur from a cyber breach, no matter how big or small, but it’s important to read the fine print to make sure there aren’t rules about when your policy kicks in or ways you can accidentally breach the terms and conditions. 

Cyber liability is a protection for businesses when their data and records are breached. That includes a wide range of possible liability, costs, and damages resulting from a cyber-attack. It’s different from general liability insurance since, unlike most other insurance policies, this kind of policy protects your digital data and resources instead of your physical property.

Here are a few of the additional actions cyber insurance companies may offer as a part of their insurance plans: 

• Inform your company when a cyber breach occurs
• Help recover identity information for anyone affected by the breach
• Protect/repair affected computer systems
• Help to recover the affected data
• Cover the cost of legal liability from security breaches
• Help close cybersecurity vulnerabilities

Every company and every policy is different, but these are some of the most common coverages.

Of course, you still need a sound cybersecurity plan in place if you want to succeed. 

What Does Cyber Insurance Not Cover?

While many business cyber security offerings are reasonably comprehensive, they don’t cover everything. Here are some of the costs you can’t expect your cyber insurance company to cover in the aftermath of a security breach:

Ongoing profit loss

Many insurance policies cover lost profits if your data or systems are non-accessible during an attack but won’t cover your losses after the attack is dealt with. That means that if you lose customers in the weeks or months after a breach, your insurance won’t cover that lost income. 

Intellectual Property

Intellectual property compromised in a cybersecurity breach can often be a severe loss for your company. Unfortunately, this is one area cybersecurity insurance doesn’t tend to cover. If your business secrets or intellectual property are compromised in the attack, you’ll have to deal with that on your own. 

Third-Party Mistakes

If you work with a 3^rd party cybersecurity company, your insurance policy probably won’t cover their mistakes. That can be a huge problem if your security company fails to push an update or leaves a known vulnerability unprotected since your insurance may use those mistakes to invalidate your claim. That is why choosing a cybersecurity partner you can trust is so important. 

Are you looking to partner with a cybersecurity company you can trust? Contact Edge Networks today.

Hardware Costs

If your company is the victim of a breach that damages your physical hardware, damaging hard drives, for instance, the insurance company usually won’t cover the physical costs of the repair. They may cover the cost of recovering your data from damaged hardware, but you’re on your own for replacement. 

Reputation Damage

While a business’s reputation is widely recognized as a part of its value in the market, most cyber insurance companies don’t cover lost value because of reputation damage.

Like any other kind of insurance policy, it’s important to know everything that is and is not covered in your policy. These are just some of the most common examples. Some insurance policies may cover these kinds of situations, while others may have other policies that aren’t covered that we haven’t mentioned.

It’s often worth paying for an upgraded insurance policy if you need something that isn’t included in a more basic version of the policy. 

A good cyber insurance policy should have certain coverage areas and meet specific requirements before you consider it.

Here are some of the requirements of a good cyber insurance policy and what you should look for when you’re comparing plans:

Business Interruption

Other than helping pay for the costs of a breach itself, this is one of the most basic kinds of protection you can get from cyber insurance. This kind of coverage helps cover the cost of lost profits from a business interruption, so your company won’t be as heavily impacted by the hacking attempt.

Some policies cover ongoing business interruptions, while others only kick in for any time your business is unable to operate. That means that you may only get partial reimbursement for lost profits if some aspects of your business are still functioning as usual.

Legal Liability

Personal data breaches are taken very seriously and are often respected in the courts. That means that businesses that suffer a breach may also be held liable for any personal information about employees, clients, or customers involved in the leak.

Cyber insurance companies usually help cover the costs of these lawsuits, regardless of the suit’s outcome. Some companies may also offer legal assistance or help your business find qualified representation to help handle legal cases resulting from a breach. 

Social Engineering Protection

Social engineering is a way of getting login information or other personal details out of people without hacking into any systems or exploiting software vulnerabilities. A skilled social engineer can learn everything they need to log in legitimately in just a few exchanges.

A good cyber insurance policy covers breaches caused by social engineering and may also provide social engineering prevention changes to help make an attack less likely. 

Electronic Media Liability

Electronic media liability is increasingly becoming another way bad actors online can affect a company, even without data breaches or other more direct actions against them. Advertisements and other electronic media that present your business in an untrue way, to the detriment of your company, can be covered under this policy.

This kind of protection is almost like protecting against the damage from online libel. It’s rare for this kind of liability to come into play, but it can be important protection when you need it.

This policy helps companies deal with the problem media and cover the costs of pursuing action against the people causing the problem. 

Cyber Liability Insurance Claims Examples

Cyber attacks come in a wide range of circumstances. Since many people don’t know what a cyber attack looks like, here are some theoretical examples to help. 

Cyber Liability Insurance Claims Example #1:

Company A has an internal IT team, a good firewall, and other protections on their system. They think they are safe but can’t push an operating system update immediately because it may compromise some of the data and programs they use every day.

Unfortunately, Company A is hit with a virus that locks employees out of the system and may be causing other harm in the background. They are told that their data is being held ransom until they make a payment, under specific circumstances, to get access to their computers again.

Thankfully, Company A has cyber insurance and can recoup the costs of the attack. While they have to pay the ransom to prevent their data from being erased, they can isolate and eliminate the virus from their systems and implement preventive measures to avoid future attacks. 

Company B is a small family business that’s thriving in the suburbs. Profits are up, and they are thinking about expanding their business or buying a bigger space. As part of their search for locations, the business owners do a lot of searching for bigger retail spaces in their area and come to the attention of a social engineer.

The engineer calls their business, pretending to be a realtor asking if they’d like to do business together and offering to help them find the perfect new location. Over the course of the conversation, the social engineer manages to get the personal information they need to reset the business owner’s passwords and guess their username.

The social engineer logs in and posts personal customer information online for sale, and several customers are hit with false charges on their credit cards before the problem is discovered.

Company B changed usernames and passwords but is still recovering from its damaged reputation and the financial loss of several customers after the breach made the local news. 

Cyber Liability Insurance Claims Example #3:

Company C was the victim of a cyber security attack that was successful about a year ago. While they were able to get the attack cleaned up fairly quickly, some customer and employee information was leaked, and several people were at risk of identity theft and credit card fraud.

Company C has an extensive cyber security policy because their company is a frequent target for cybercriminals, and the policy covered this attack. They were able to recoup the costs of the attack, and the insurance helped pay for identity theft protection for the affected individuals. Because they helped pay identity theft protection, Company C avoided several lawsuits over the breach and hasn’t suffered much reputation damage. 

Many people recognize that cyber insurance is important for big companies with a lot of digital information to protect but are surprised to learn its importance for smaller companies.

Cyber insurance becomes essential whenever you have personal information stored in your business databanks, but it can be important even before that. Here are some basic ways to tell if you need cyber insurance and what level of protection is necessary. 

Your Business Stores Important Information Digitally:

Even if you also have hardcover backups, your business may need cyber insurance if you store critical business or personal information on the cloud. The more information you store, the more crucial cyber insurance becomes. 

Personal Information Is Protected In Your Industry:

Healthcare, educational, and legal companies all have higher standards of protection required for information. If you work in one of those industries or have other information protection requirements, it is a good idea to have a good cyber insurance plan. 

You Don’t Have A Cyber Attack Plan: 

Some companies can provide their own protection and understand cyber security well enough that cyber insurance is less important. But if you don’t have a plan for what your business would do if you had a cyber-attack today, you should probably consider cyber insurance. 

Want to get started on planning your company’s incident response? Check out our guide (including a FREE Incident Reponse Plan Template).

You Don’t Know How To Protect Your Business Information: 

You may be aware that your business’s data needs protection, but knowing what level of protection you need is a different matter. Having a good cyber insurance policy can help cover any accidental gaps left in your cyber insurance plan. 

You Don’t Have The Finances To Cover A Breach:

One way to decide if you need cyber insurance is to think about the realistic costs of a cyber breach. Cyberattacks have targeted as many as 50% of small businesses in the U.S., and this number is only increasing. If your business wouldn’t survive the full cost of a successful cyber attack, cyber insurance was designed for you. 

Conclusion

If you’re still on the fence, you should talk with your business’s cyber security team and see if they think cyber liability insurance would be an excellent addition to your cybersecurity plan. Do they think you are relatively safe against a cyber attack?

Contacting an insurance agent is another good idea. They’ll be able to evaluate your need, risk factors, and current setup to see if cyber insurance is a good option for you.

You may find that you want to prevent a data breach before disaster strikes. In that case, many 3^rd party cyber security firms, like Edge Networks, offer evaluation services and can rate your current security strengths, needs, and weaknesses. To learn more about the health of your business’s cybersecurity, take our free, self-guided IT security risk assessment today, or contact us to schedule a free 30 minute consultation.