You don’t have to go far to hear about hacker attacks on high-profile companies and organizations. Any news source you look to for information whether it’s the TV, internet or print has a headline with the buzz word cyber. What does “cyber” mean? Cyber is anything have to do with the information passing through the Internet or from computer to computer-like device and is used to describe actions through the use of a computer. One common use of cyber that you will here in the media is an attack. A cyber attack is when an individual with sophisticated technological skills utilizes them to enter and disrupt another computer system for a specific purpose.
These sophisticated users, referred to as hackers, break into computer systems for several reasons including system control, denial of access, data mining, or to damage the computer system. Any organization that utilizes devices connected to the internet is at risk, not just companies that rely solely on computers or the web. These can include point of sale (POS) systems, cell phones, office phones, and Bluetooth-enabled devices. So what can you do if a hacker gains access to your computer system? There are a number of security techniques that organizations can use to defend themselves, but it seems that as soon as the security is in place there’s someone trying to defeat it.
The most effective way to combat a cyber attack is to acquire cyber liability insurance. In general, this form of insurance protects against information exposed due to a data breach. For example, a coffee shop that accepts credit card payments is responsible for the security of their customers’ credit cards. If a hacker accesses the shop’s POS system, they could use those numbers to gain access to the customer’s credit card accounts. The coffee shop will be responsible for notifying customers of the breach and defending themselves in a lawsuit if customers chose to sue for damages. The shop may also need to provide credit monitoring services or hire cyber security experts. This comes at a great expense to the coffee shop and a small business without cyber liability coverage could go out of business.
You might remember a similar situation involving Target Corp. and a massive data breach during Christmas 2013. According to The Journal Sentinel, the breach, which affected more than 41 million customer payment card accounts and exposed contact information for more than 60 million customers, was finally settled in May for $18.5 million dollars. The incident led to dips in profits and stocks, the resignation of the CEO, and full overhaul of their entire security system. Target Corp. not only had to pay for the settlement but also had to pay for all the legal cost for the last four years.
While that is an extreme case, cyber liability coverage is also appropriate for any company using a database to keep employee and customer records with sensitive information such as bank account information or social security numbers. This includes manufacturers, retailers, financial planners or local banks. Discussing whether your company is at risk for cyber attack and how you can protect yourself is a crucial conversation to have in the near future.
If you’d like to discuss with one of our Risk Advisors, you can give us a call at 303.279.9700 or email Benjamin.C@allinsgrp.com.