Is your business cyber-smart? Understanding cyber liability Insurance - Blog

By On Mar 23, 2016

Padlocks, alarms, and burly security guards don't cut it these days when it comes to protecting your business. Even with the best physical security, your business can still be at risk from costly cyber-attacks. 

When many of us think of hacking, we tend to think of it in terms of theft and illegal access. Shows and movies like C.S.I and Swordfish have somewhat romanticized the idea of a criminal computer genius. A diabolical mastermind, obliterating firewalls, and deftly maneuvering around password security to drain a corporate bank account, or illicitly obtain trade-secrets and internal documents. And it's true, just look at the Sony PlayStation network hack of 2011 which compromised over 77 million users confidential information (eek!). While Hollywood might get some of the details wrong, these threats do exist and are something businesses should think about (although, in reality they probably feature fewer swirling 3D models of system-security measures and most hackers can only dream of looking like Hugh Jackman).

What businesses are more likely to suffer though are the pedestrian types of cyber-crime, the low-hanging fruit of the hacking world. These can include distributed denial of service (DDOS) attacks, where hackers bombard a website with so many page requests at once that the servers collapse under the sudden demand and effectively crash the site. A sustained DDOS campaign can shut down a site for prolonged periods of time, cost your business both missed revenue and the expense of upping security and possibly migrating to a more robust server system. Worst of all, as a brute force method, they are fairly easy for hackers to orchestrate. 

Of course there is also the risk of spam - junk emails and clumsy phishing attempts clogging up your businesses inbox and website comments, making it all the more difficult to get work done. Spam also leaves networks vulnerable to Trojan viruses that may be embedded in fraudulent mail or bad links. At their most "benign,” Trojans can infect your staff's computers with malware that will make their systems sluggish, pester them with ads, or harness your processing power for a DDOS attack (a practice commonly called a "zombie farm”). 

This isn't even mentioning the potential embarrassment and headache of hackers getting into your business' social media accounts and messing with people in your name. It can be a heck of a knot to untangle when your official Facebook or Google Plus account starts mouthing off to customers. It's such a common scenario for large businesses that Honda famously parodied the phenomenon back during the Christmas of 2014, pretending its Twitter profile was taken over by Skeletor, villain of the '80s cartoon show, He-Man.

Whatever its form, cyber-crime represents just as large and legitimate a threat to your business' ability to operate as someone smashing the front window and running off with a cash register. Not only is there the direct risk to your business, but with recent regulation placing more responsibility (and direct legal liability) on businesses to protect against and immediately respond to cyber-intrusions that compromise customer information, it has never been more important to protect your business from cyber-attacks.

Cyber liability insurance can help with that. Depending on the package and type of insurance purchased, cyber liability insurance can help respond to costs your business may incur as a result of a hack or privacy breech. First Party insurance protects the business itself, covering the costs of things like notifying customers of the incident, investigating the issue, and crisis management, among other things. Third Party coverage extends to the costs outside of the business, legal liability for damage to other parties, virus transmission, impaired access, and so on. An insurance company can also provide access to experts that understand this type of crime and know how to respond to it, getting your business back on track as soon as possible.

As part of Fraud Prevention Month, make sure your business is cyber-smart. Call a Stabler broker today to discuss your options.