Why Insurance to Cover Cyber Risks to Your Business is Important

Why Insurance to Cover Cyber Risks to Your Business is Important

May 20, 2021


Why Insurance to Cover Cyber Risks to Your Business is Important

As a business owner, it is important to realize that a cyber attack can have a potentially damaging effect on your operations, which is why the smartest thing to do is to purchase insurance for traditional cyber risks, like breaches involving the unauthorized use of personal information, and report that you are confident you have the right insurance protection in place.

Still, most business owners have too much of a false sense of security to realize that the evolving nature of cyberattacks is leaving some of their businesses exposed to cyber risks they may not even know they face.

The Prominence of Cyber Risks

Cyber threats which grow in complexity and frequency as more companies go digital and interconnected are faced by most businesses and while about seventy percent of businesses surveyed identified breaches of personally identifiable information as to their top concern, only eleven percent of businesses were concerned with supply chain risks. Ironically, cyber supply chain risk is one of the fastest-growing cyber threats facing businesses today.

It is however encouraging to see that some businesses now acknowledge the need to introduce third-party experts to protect their operations and data better. Although, it is also important to know that outsourcing such critical functions can lead to an increased level of risk, most especially business interruption exposure.

Coverage for Cyber Risks

There are three cyber coverages to consider in order to have the proper insurance protection and risk management plans in place. This way, you can identify risks and structure insurance programs that help mitigate possible exposures and address your unique needs.

  • Business Income: Business income loss coverage covers the cost of lost income and extra expenses incurred while a system is being restored after a cyber attack. It is advantageous to also add coverage for contingent business income in the case of implications to a client's business if one of their suppliers were to experience a cyber attack.

  • Reputational Harm: Unlike traditional business income coverage, reputational harm coverage helps to address a reduction in the revenue after a system has been restored. This is beneficial when revenue does not immediately return to its pre-attack level because of customers' hesitance to return after a cyber attack.

  • Systems Remediation: This coverage helps to reduce vulnerabilities to emerging attack vectors that may not have been previously recognized or understood, unlike some other cyber offerings that only pay the business to mitigate the effects of a cyber attack or others that merely provide funds to help address system deficiencies identified after a loss.

In conclusion, it is important to have the necessary cyber insurance policies at hand as new technologies emerge and businesses become more interconnected. For the right cyber insurance policy to fit your needs, contact Bell Black Insurance today! We serve all insurance needs for those in Idaho Falls, Island Park, Driggs, Victor, Swan Valley, Ashton, and the neighboring communities in Idaho, as well as Jackson and Star Valley in Wyoming.