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  • Writer's pictureAlex Keeley

Cyber Risk Part IV – Insurance

Updated: Dec 21, 2021

No discussion of cyber risk would be complete without examining insurance. Insurance can be a daunting and potentially very expensive purchase, however in the world of cyber security, it is an absolute must. The first question regarding cyber insurance is what to cover? The cyber insurance market has evolved significantly of late, and there are now insurance policies for nearly all potential risk areas in a business. The most common distinctions in policies include “first-party” – insures for policyholder’s losses – and “third-party” – insures for the liability of the policyholder to third parties, i.e. clients, etc.[1] – coverage.

Some common types of cyber insurance are:

  • Data breach/privacy crisis management cover: This covers expenses related to the management of an incident, the investigation, the remediation, data subject notification, legal costs, court attendance and regulatory fines.

  • Multimedia/Media liability cover: This covers damages regarding to specific defacement of website and intellectual property rights infringement.

  • Extortion liability cover: Pertains to losses due to a threat of extortion and professional fees related to dealing with the extortion.

  • Network security liability: Covers third-party damages as a result of denial of access, costs related to data on third-party suppliers and costs related to the theft of data on third-party systems[2].

In this case, one-size does NOT fit all, so don’t go overboard and buy every type of cyber insurance out there. Like every other type of insurance, it is expensive. Find the areas you believe are most at risk by prioritizing and covering those. The amount of coverage you need in any given policy will be based on your risk assessment analysis. After assessing your risks work with your broker to find cost-effective insurance solutions for your business.

In this day and age, cyber insurance must be a key component of your company’s risk management strategy. It minimizes damages and costs, as well as protects your company’s balance sheet. Bottom line? Work with you broker to find the right policies and coverage amounts for your business, and do that immediately.

[2] See: This Blog, and the information contained herein, are intended for informational use only. Nothing in this Blog should be construed as legal advice.

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