How Data Breach Insurance Protects Your Business

data breach insurance

In today’s business environment, nothing is more valuable than information. Companies collect huge amounts of data and gain insights into a wide variety of factors that impact their bottom line, like customers’ buying habits, logistics for delivering products to retailers, and the needs of employees. Analyzing those findings often presents an organization with opportunities to streamline operations or better meet the demands of the people it serves.

Unfortunately, all that useful knowledge also attracts hackers. Data breaches are a rampant problem, and organizations have a responsibility to do everything they can to protect against these incidents. Along with robust security measures, data breach insurance is one of the most important tools a business has to guard against the dire consequences of a cyber attack.

Is any organization safe from breaches?

“The threat of compromised data continues to mount each year.”

According to the Gemalto Breach Level Index, the threat of compromised data continues to mount each year, with an average of 5,495,088 records now lost or stolen every day. Hackers have targeted everything from banks to hospitals in order to gain sensitive information like credit card numbers, confidential files, or medical records. This data can then be used to take funds, make unauthorized purchases or commit identity theft, or it might be put up for sale on the black market.

Criminals use a variety of methods to gain access to systems, but, according to Verizon, phishing is the most popular. In these incidents, the hacker employs social engineering techniques – often sending an email or instant message impersonated a trusted company or individual – to convince a worker to turn over login credentials. Ransomware attacks, in which malicious software blocks the organization’s access to vital records until the hacker receives payment, have become increasingly common as well.

While large companies or government institutions may be attractive to hackers because they have huge volumes of data in storage, that doesn’t mean smaller organizations are safe. Data breaches may specifically target a lesser-known business in the hope it will be easier to get through any security measures.

The effects of a cyber attack

When confidential information is stolen, there are extensive consequences that can leave an organization reeling. If systems become unavailable to customers due to a distributed denial of service or another type of attack, that may mean a significant loss of income. The company may also need to take on new expenses to replace compromised devices and find that important records have been corrupted, making it impossible to refer back to vital data.

If information that belongs to a customer, client or vendor is stolen, the organization could be held liable for their financial losses or the damage to their interests. Even if management and information technology specialists worked diligently to maintain security, a lawsuit concerning the loss of private proprietary data can be both costly and damaging to its reputation. In turn, a company that has struggled to protect its records may be perceived as unreliable and careless, making it harder to win business in the future.

Protecting your business from data breach fallout

To guard themselves, employees, customers, clients, and vendors from the effects of a cyber attack, business leaders must keep security measures up-to-date, following best practices for storing and disposing of data. Employees should undergo regular training in how to identify and report phishing scams. In case those steps fall short, however, organizations need the protection provided by data breach insurance.

McGowan Program Administrators offers policies customized to the specific needs of businesses and other organizations. Data breach insurance is included in packages geared to managers, medical professionals, media and technology companies, and many other areas where protecting confidential information is vital. Every organization must be aware of its risks and ready to act to protect its interests in case of a cyber attack.

Cyber Liability Insurance