Every decade the insurance and risk management industries come across new-found exposures and the need for enhanced coverage for commercial entities. In today’s marketplace, a set of newly minted exposures has outpaced the others and that is Cyber Liability and Network Security coverages.
With all the news in the media surrounding data breaches of major corporations across the world, the loss of customer data has been pushed to the forefront. Whether it is Target or most recently Home Depot, businesses large and small are feeling the effects of both domestic and foreign network hacking. In these larger instances, companies are staffing their IT departments and much of this information is kept in-house. In the case of most small to medium-sized businesses, they have outsourced this exposure and rely on 3rd parties. The problem is, and what many don’t realize, when you outsource IT and your database storage, you don’t necessarily relieve yourself of the liabilities that come along with attaining that information through your day-to-day operations.
Your organization is fully responsible for the safety and security surrounding this information. In turn, it must be taken into consideration when developing your overall insurance/risk management program. The exposure to loss will either be insured or retained. Whether you buy insurance for this or not, at least the decision is made in advance, based on your business exposures. Which seems much less problematic than the alternative; trying to decide after the fact, the best course of action for dealing with a data breach and the potential law suits that follow.