Risk & Business Magazine Cooke Insurance Group Spring 2016 | Page 7

The Inherent Risk of Technology Cyber Liability BY: ANDREW SCOTT, BUSINESS INSURANCE BROKER / LIFE & GROUP BENEFITS ADVISOR, COOKE INSURANCE L ike it or not, data storage is moving to a virtual space. Along with that move comes added risk to privacy, the potential for data breaches, and other cyber concerns. The last few years have seen major breaches in the cyber security of a number of wellknown corporations, including Kmart, Target, American Express, and Home Depot. Even closer to home, however, most of us have personally experienced the issues that can arise when our online security becomes compromised. Our personal information is stolen and, often, is then used for nefarious purposes. The grief that a cyber attack can cause to an individual is bad, but the damage that can be done to a business is far worse. Errors and Omissions – Coverage in the Cyber coverage is meant to help protect companies against the exposures that technology can now present. These policies are typically standalone. They are, at times, included as riders on existing policies, but in those cases they will have significant limitations. Media Liability – Protects against claims Modern cyber policies have four main components (varying in coverage depending on the policy: event of errors made in the performance of services, including software, consulting, IT, and professional services. Network Security – Covers companies in the event of a network failure leading to virus transmission, cyber extortion (through shutting down business operations online), data loss, or loss of sensitive documents. Privacy – This protects a policyholder anytime customer information is breached. This could be physical records, lost hard drives, hacks, or any of a variety of other situations in which consumer privacy is breached. of intellectual property infringement, copyright or trademark infringement, libel, and slander related to media. These policies often have limits up to $500,000 or $1M. It is important to take into account the potential losses that could be faced when deciding on limits. Privacy laws can carry hefty fines, particularly if your company is held responsible for losing customer information. Target, for instance, in their 2013 data breach, ended up paying $39M in settlement costs. A very small fraction of that amount would be enough to put most companies out of business for good. Can you afford to be left in cold by your cyber exposures? As we transition into the future, the exposures presented by technology are only going to increase. Businesses, large and small, are becoming more and more dependent on virtual storage of customer and client information, business documents, and other sensitive files. Additionally, network security, liability related to media files, and privacy laws can all add levels of exposure to business operations. The need for cyber coverage has never been higher, and it is important to make sure you are mitigating any potential risks that may arise before they present themselves as a serious issue. If you would like a review of your current cyber exposures, we would love to hear from you. Send us an email at [email protected] or call Andrew Scott at 1-800-566-5666 ext 4825 for a review and consultation. Andrew Scott, a Business Insurance Broker, has a passion for technology and how its ever changing improvements affect each business with regards to their insurance exposures. SPRING 2016 7