Firms are buying insurance ‘in mad panic’ as cyber-attacks soar.
Companies of every size have standard expenses. It might be payroll, office supplies, the lease on their location, a fleet of vehicles, or any of a hundred other considerations depending on the type of industry they’re in. But one current craze is a smart bet for any kind of business: cybersecurity insurance.
It’s not just a matter of protecting your network and your stored data from a virus. Instead, “hacking insurance” protects a company from the legal and punitive fallout of being a victim of a cybercrime.
In an era of record-setting numbers of data breaches according to the Identity Theft Resource Center, this is an expense that businesses cannot afford to skimp on. Single ransomware attacks like WannaCry can leave billions of dollars in damages in their wake. Depending on the information that was accessed by the hacker–such as complete identity profiles–the costs associated with cleaning up the mess can cause a business to close their doors for good.
Back in the good old days–make that 2013–Target was one of the first major name retailers to make headlines for a cyberattack. The infamous Black Friday event stole the credit card and debit card information for millions of the retailer’s customers. No personal identifiable information to compile a complete identity was stolen, only the payment and account holder info. That single event cost Target $252 million dollars.
But wait…Target’s insurance coverage brought that amount down to only $162 million. After taking advantage of some tax deductions associated with the lost revenue, Target’s cost for the breach of 40 million credit cards and 70 million account holders’ email addresses was only $105 million.
The insurance alone was worth almost $100 million, close to the total amount that Target had to eat for allowing a virus to infiltrate its point-of-sale system on the single largest shopping day of the entire year.
There’s a downside to this new recognition that businesses need cybersecurity insurance, though. The mad dash to get coverage can mean that companies are purchasing “bargain basement” insurance that really doesn’t protect them at all. The flip side is a small business owner being targeted by a predatory insurance agency and signing up for expensive coverage that they don’t really need. Businesses are urged to be cautious about their coverage, make sure that it is suited to their particular industry and needs, and don’t get ripped off in the process.
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