Strategic Cost-Saving Opportunities Volume II | Page 9

Of course, the cost can go much higher. In February 2015,
Target announced that the gross cost of its breach came
to $191 million for the 2014 fiscal year, though its insurance
paid $46 million.
Your traditional coverage may pay for some of the
damages from an attack – but it’s not safe to assume
that it will cover all your losses. A recent report from the
insurance intelligence organization Advisen noted that the
market for stand-alone cyber insurance has been growing.
Policies can cover a range of costs from an attack, such as
crisis management, communications, and credit-monitoring
services for your customers and clients.

Click here to request a copy of our
cybersecurity infographic.

Cyber Insurance:
A Tool for Remediating
and Preventing Damage
Companies that put substantial time and resources into
protecting their computer systems can still fall prey to
intruders. But even if it’s not your fault that a breach
occurs, you still got hacked, says Bill Goddard, a Principal
in the Insurance Advisory Services group at Brown Smith
Wallace. “There’s a lot of liability that comes along with it.
If you’re not buying insurance for this, realize you’re taking
on a fairly significant risk,” he says.

Procuring this insurance can help you better understand
your company’s risk of a data breach and the additional
protective measures you should consider enacting. Assess
your risk, test your system’s defenses and evaluate your
level of preparedness.
An insurer may also encourage you to implement an
enterprise risk management (ERM) program that
addresses your cyber risk. An ERM program addresses
all areas of your company’s risk exposure and manages
“the combined impact of those risks as an interrelated
risk portfolio,” according to the Risk and Insurance
Management Society. These programs are rare in smaller
and mid-sized companies, which may struggle to find the
resources to maintain them. At a minimum, all companies
should be performing an annual security risk assessment.

A recent study – also by Ponemon – found that the
average total organizational cost of a data breach in the
U.S. in 2014 was nearly $6 million. Expenses can include:
• Investigating and remediating the breach
• Notifying customers affected by the attack, as well
as regulators
• Public relations
• Providing identity protection to customers
• Discounts or free services to customers affected by
the breach
• Loss of business, including added customer turnover
Cybersecurity // 09

Click here to request a copy of our
cyber insurance infographic.

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