Digital is a new way of life. Individuals, as well as businesses, have transitioned to the virtual world for almost every requirement whether it is news, health, entertainment, shopping, investments, or exchange of money & information.. Covid-19 has further accelerated digital transformation. The pandemic brought on some unprecedented challenges such as social distancing, quarantining & working from home. Corporations quickly digitalized their operations to survive & thrive in times of disruptions. When everyone was locked in their homes, the internet helped the world function smoothly.
But while the escalation of technology empowers individuals and corporations, there are emerging risks that accompany it. How safe is the virtual world? What are the perils we face on a daily basis while operating online? What kind of cyber threats are we prone to? Do we need cyber insurance?
Uncertainty & unawareness around cybersecurity leads both individuals and corporations to major losses.
Since the pandemic, India has seen a steady rise in the no. of cyber frauds, ransomware, data breaches & attacks.
Indian companies have reported more cyberattacks than any other country, with 56% reporting a rise in their IT costs in recent months. This is twice the global average, according to the Acronis Cyber Readiness Report 2020.
Cybersecurity is one of the top challenges for small businesses & corporations. The insurance industry has promptly deployed schemes & policies to help organizations mitigate cybersecurity risk exposure.
“There is an imminent need for holistic risk assessment of the digitization drive at a country, sector, & company levels. The Cyber Insurance industry needs to step up to evolve more nuanced policies aligned to digital risk quotients.” Rama Vedashree
CEO, DSCI during her address at Global Cyber Insurance Summit 2021.
What is cyber insurance?
Cyber insurance, also known as cyber liability insurance or cyber risk insurance is a management product designed to financially protect commercial businesses against the damaging effects of cybercrimes such as malware, ransomware, data breaches, cyber extortion etc. It helps businesses to potentially recover from any financial liability & disruption that occurs due to cybercrimes.
What is the importance of cyber insurance?
With the rising number of cyberattacks and data breaches, businesses are realizing that such cybercrimes can be catastrophic. Cyber risk can be managed & mitigated by revisiting policies, reviewing process & enhancing training.
Cyber Insurance is a form of risk transfer in which the financial losses incurred from cybercrimes is transferred from the business to the insurer in accordance with the policy.
Businesses & insurers face many challenges in assessing & quantifying cyber risks & insurance products.
Businesses should keep up to date with advancements in cyber risks & ensure that their policy covers those risks. It is necessary to empower employees & clients with an awareness of cyber risks.
Business leaders should discuss cybersecurity policies & procedures with insurance providers prior to entering any agreements.
Cyber Insurance Highlights
What does a cyber insurance policy cover?
▪ Business interruption costs
▪ Cyber extortion expenses
▪ Forensic investigation costs
▪ Administrative fines
▪ Legal expenses
What are the exclusions?
▪ Willful violations
▪ Property damage
▪ Loss of Intellectual Property (IP)
▪ Bodily injury
▪ Loss due to cyber terrorism/war
A cyberattack can damage more than just your business data & computer system –
it can severely harm your reputation and put your stakeholders at risk. Hence, cyber insurance is highly recommended for businesses to operate in today’s hyper-digital world.