Companies Look To Cyber Insurance To Prevent Damage Of Data Breaches

These days, data is as valuable as gold and needs more protection than ever. Every company conducts at least part of its operations online, so more and more threats lurk on the web. Fortunately, even if things go wrong, there are ways for organizations to recover.

In today’s digitized world, hackers and cyberattacks are among the biggest threats to small and large companies. According to Check Point Research, the number of cyberattacks in 2022 was 38% higher than the previous year. And this growth won’t stop anytime soon. The world is moving into the online space, and so are the criminals.

This cyber threat problem is why companies seek the most valuable solutions to defend themselves. They invest in hardware and software, employee training, and various other forms of protection, such as virtual private networks for safer data transfer since VPN uses include secure remote access for teleworkers.

But while protection is essential, sometimes it isn’t enough. Even the largest, seemingly well-secured organizations fall victim to cyberattacks and data breaches. For most companies, a cyberattack is not a question of if but when.

So what happens after a company is breached? The costs of dealing with the aftermath of an attack are immense, and for many (especially small and middle-sized) organizations, it can be the final blow, leading them to bankruptcy. Fortunately, all needn’t be lost. Insurance companies now offer various forms of cyber insurance, which can provide invaluable support in the event of a security breach.

What Is Cyber Insurance?

Cyber insurance protects the client from damage caused by cyber threats such as malware attacks, viruses, and data breaches. Of course, cyber insurance doesn’t provide any protection, but it’s intended to financially support an organization that has already lost a lot due to an attack.

What Does Cyber Insurance Cover?

Coverage varies depending on the insurance company and the plan offered. Typically, if an insured organization falls victim to an attack, compensation may cover the following:

• lost and damaged equipment,
• costs of recovering lost data,
• liability actions were taken against the attacked organization,
• legal defense costs,
• compensation for affected parties, e.g., clients whose data was stolen.

Many cyber insurance plans also include active support in the event of an attack. It means they can provide a company with the assistance of a security team.

Is Cyber Insurance Enough?

Cyber insurance is an excellent addition to any business operating online, but it’s worth remembering that it’s not an all-purpose solution. It won’t do much for loss of reputation or drop in sales. What’s done is done – that’s why a cyber insurance policy shouldn’t be the only thing that keeps a company’s security afloat.

Cyber insurance alone won’t even work – most insurance companies will only offer financial compensation if the breached organization has taken necessary measures to protect itself from cyber threats but has fallen victim anyway.

So what should the executives do?

• Invest in employee training. A considerable number of all cyberattacks result from human error. Techniques such as phishing are widespread among criminals because they don’t even require technical knowledge. If a cybercriminal convinces an employee that they also work for the organization, they can access the network and data – no system hacking is required.
  However, proper education can minimize the risk of human error. Employees should be trained to use the organization’s data and infrastructure safely. It’s also a good idea to conduct simulations to discover weak links and vulnerabilities.
• Implement a zero-trust strategy. The zero-trust approach in cybersecurity assumes that all users and devices are a potential threat and must be verified before any network access is granted. It means that employees must be vetted to access sensitive data. A zero-trust strategy includes monitoring the network for any suspicious activity.
• Limit data access. Everyone in an organization should only have access to the data they need. It minimizes the risk of losing all critical information if one person falls victim to a cybercriminal.
• Implement necessary software and hardware solutions. No company should connect to the internet without properly configured antimalware software and firewalls. They are the first line of defense against all kinds of cyber threats.

Cyber insurance can be helpful, especially for smaller companies that don’t have the funds to deal with the aftermath of a data breach. However, it’s important to remember that it’s not a solution to the problem of cyber threats. A policy doesn’t provide protection but only helps in a crisis. So, if you’re looking for a good cyber insurance policy, make sure your company has other security measures in place.

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