Companies around the world and across industries face greater cyber threats than ever before. Cybersecurity incidents are becoming ever more frequent, and the costs associated with those attacks have marched upward too.
As the risks grow, companies have strengthened their capabilities, both in prevention and incident response. Still, no company can guarantee that it will never be hacked, so companies must have cyber insurance in place in case the worst happens.
What Is Cyber Insurance?
Cyber insurance is a type of insurance policy specifically created to cover cybersecurity incidents such as cyberattacks, data breaches, and other forms of cybercrime.
The cyber insurance market has grown steadily in recent years as attacks by cybercriminals have become more common. Unfortunately cyber insurance premiums have been rising as well, as the costs of the attacks have increased.
What Does Cyber Insurance Cover?
Cyber insurance policies can be comprehensive, covering not just the financial damages incurred by the attack but also remediation costs such as consumer reimbursements, crisis communications, legal services, investigation costs, and even specialist negotiators tapped to deal with the hackers.
That said, relying solely on cyber insurance is unwise, because such policies usually won’t cover the costs associated with public relations damage or the loss of intellectual property.
What Is Ransomware?
Ransomware is a type of malicious software (malware) that can lock your employees out of their own computer systems or steal and encrypt your corporate data. Hackers then make ransom demands to return access to your systems or data. Even when ransom payments are made, however, there’s no guarantee the hackers will indeed restore access as promised.
Even worse, many hackers also announce their attacks to the world, causing your company reputation damage in addition to the business interruption and costs from the ransom payment.
Ransomware attacks have been on the rise, with some experts predicting the costs associated with ransomware damages could exceed $30 billion worldwide in 2023.
The threat companies face from cyber extortion is bigger than ever, and having adequate protection in place is an essential part of strong risk management.
Is There Insurance For Ransomware?
The insurance industry has begun to package insurance policies that expressly cover risks from malware, phishing (sending authentic-looking communications that trick people into giving access to data or systems), and other forms of cyber risk.
Ransomware is usually covered within a company’s wider cyber insurance coverage, but not always. Policyholders looking to manage their cyber liability should check with their insurance broker or insurance company to confirm that their policies include ransomware coverage. Otherwise you might discover that your insurance policies don’t cover all your relevant risks.
Do You Need Ransomware Protection?
It may be tempting to go without cyber insurance or ransomware protection, and instead try to make do with multi-factor authentication and regular backups. Think long and hard before doing this; the cyber threats that companies face should not be ignored.
Even without ransomware payments, the cost of cyber insurance premiums pale in comparison to the costs that companies can face from business interruption and the reputational damage they can suffer if consumers begin to see the company as cavalier with their user data.
Even small businesses, which may see themselves as too small for hackers to bother with, can find themselves targets. Even if they have smaller computer systems with fewer endpoints (user devices that can be attacked), smaller companies often have less sophisticated systems in place to protect against cyber attacks.
What Is The Average Ransomware Payout?
Ransomware payouts can vary widely, but they have risen sharply in recent years. Research from Palo Alto Networks found the average payment could be as high as $925,000.
Moreover, the cost of the ransom payments is only the start. The overall data breach cost can spiral far higher (into the millions) once the cost of downtime, business interruption and reputational damage is taken into account. It is critically important that companies take all necessary action both to prevent data leakage and to put proper cyber insurance in place, so that you can respond and prevail if an attack takes place.
Protect Your Data With the Roar Platform
Reciprocity’s ROAR platform gives you everything you need to manage cybersecurity risk and stay ahead of threats, and makes it easy to start monitoring your risk with fast onboarding, in-app scoring, and risk scores.
The ROAR platform gives you a unified view of compliance and risk, giving your team their time back and making risk management easier than ever. Schedule a demo today to find out more.