Whether you’re hit with a data breach, ransomware or a distributed denial of service attack (DDoS), having your business compromised by a threat actor is a nightmare scenario.
First, there’s the reputational damage. Any customers, clients or business partners impacted by the cyberattack may choose to part ways with you and take their business to a competitor. If the breach is severe enough, your brand might never recover.
If you’re lucky, that’s all you’ll have to deal with. If you aren’t, you could face anything from regulatory penalties to class action lawsuits. Cyber incidents are always bad news, and given that threat actors are more numerous and sophisticated than ever, every organization is dangerously close to experiencing one.
That’s where cyber insurance—also known as cybersecurity insurance or cyber liability insurance—comes in. It helps protect you against all the negative business impacts of an incident. These may include:
- Lost or stolen data
- Lost revenue
- Damaged, lost or destroyed devices
- Legal fees
- Public relations expenses
- Digital forensics costs
Protection is, therefore, something that every business needs. With that said, there are a few things you must understand about cyber insurance as a CSO.
Start with a Full Risk Assessment
Imagine that someone with multiple life-threatening chronic illnesses attempts to apply for health insurance. Few insurance providers would choose to work with that individual. The same principle applies to expecting coverage from a cyber insurance provider if you haven’t gotten your own house in order first.
And that means starting with a full risk assessment. You need full visibility into your attack surface and ecosystem, a complete account of your business’s assets, and a full assessment of the threats you’re vulnerable to. The good news is that many cyber insurance companies will help you perform these assessments as a value-added service. And the better news is that by doing so, you can considerably lower your premiums.
Ensure that You Always Read the Fine Print
We’ve all heard horror stories about someone who failed to fully read a contract before signing it. Doing that opens you up to a whole laundry list of potential problems, including hidden fees, unfavorable clauses and unreasonable requirements. Before you agree to any insurance policies, have your attorney or legal department go over your contract with a fine-toothed comb.
Cyber Insurance Is Useless without Cybersecurity
It’s not enough to understand your threat landscape. You also need to have the wherewithal to actually address those threats. You must ensure that you have the right solutions, vendors and processes in place to proactively address digital threats. Without a security backbone to support your insurance policy, you’re basically just throwing money into a pit.
Cyber liability insurance is relatively new in the world of insurance—most other forms of insurance have been around for centuries. That doesn’t make it any less important, though. As we continue to embrace distributed work and digital transformation, the need for insurance against all manner of threats will only grow more pressing.