In light of the recent slew of cyber attacks, many companies are searching for new measures to improve their data protection practices. In addition to the traditional data security solutions, many are also turning to a new means of protection – insurance.
According to a recent FOXBusiness report, the rise of cybersecurity threats facing companies has resulted in a new form of cyber liability coverage.
As many businesses have recently learned, there is no way to guarantee absolute protection from a cyber attack or data breach, and having an insurance plan in place may be necessary to protect a business from the millions of dollars that can potentially be lost in such an incident.
Cyber liability coverage actually makes a lot of sense. Just as most businesses are insured to safeguard their assets in the event of a natural disaster, why shouldn't those protections extend to websites, data centers and other IT solutions?
"Getting hacked is doubly damning – there is the actual initial damage caused by the hacker, the cost to provide notice and credit monitoring if personal information is involved, as well as the secondary liability costs and defense expenses associated with actions by vendors, credit card payment processors, customers and regulators. There’s also the cost of cleanup," wrote FOXBusiness' David Navetta.
According to the Open Security Foundation, there have been 224 data breach incidents in 2011 so far, affecting more than 112.7 million records. One of the most high-profile of those breaches affected Sony and its online gaming service, the PlayStation Network. In the company's recently revised earnings forecast report, it estimated that the data breach has cost $171 million so far; though this figure does not account for potential lawsuits that may ensue.
With cyber liability coverage, Sony would likely be able to deflect some of that cost, lessening the impact of the data breach. However, this should not undermine the effectiveness of sound data protection measures.