In a world that is increasingly dependent on technology for everything from communications to product design and logistics management, companies are reviewing and upgrading their cyber security on a regular basis. However, regardless of how airtight and up-to-date their security measures are, businesses may still be subject to cyber breaches.

Cyber insurance can help a company that has experienced a cyber breach recover from the consequences of the breach. Find out the five reasons why businesses should consider this specific type of insurance:

1.     Cyberattacks against businesses have grown in frequency and impact. 

Cyber incursions are increasing and becoming more sophisticated. In 2022 alone, there were a total of 74,073 instances of cybercrime reported to police in Canada. Cyber threats should be top-of-mind for corporate risk management teams and small business owners alike.

Cybercriminals are not selective about which organizations they target. Affected organizations range from oil and gas conglomerates and municipal library systems to small businesses in a variety of industries. Small businesses, in particular, may not be aware of the risks they face from cyberattacks and may not have sufficient protection.

2.     Cyber insurance can offer financial protection in the event of a cyber-attack.

Cyber-attacks can be extremely costly. Expenses they may lead to include:

  • Investigation and consulting services to look into any cyber breaches and to make recommendations about preventing breaches in the future
  • Increased and updated cyber security
  • Crisis management and public relations services
  • Income that is lost during IT system downtime
  • Legal fees
  • Third-party liability claims if personal or organizational data are compromised
  • Regulatory fines and penalties, if applicable
  • Additional employee training
  • Data restoration and backup

3.     Cyber insurance can help protect and restore a company’s reputation.  

A cyber-attack can severely damage a business’ reputation. For example, a business may store detailed financial and tax information for their clients, including images of their clients’ signatures. If this information is stolen and disseminated to criminals, the consequences could be financially devastating for these clients.

Suppliers and business partners could be similarly affected by a data breach, which could damage valuable relationships and even lead to lost business.

Having cyber insurance in place can do a great deal to enhance the company’s reputation and public trust. If a cyber breach does occur, cyber insurance can help with the tools and services needed to restore the data and regain the confidence of the company’s clients, suppliers, and business partners.

4.     Regulatory compliance penalties and fines may be covered by cyber insurance.

Although Canadian businesses are not legally required to carry cyber insurance, many of them risk fines or other punitive measures if they do have a data breach; proactive risk management against cyber-attacks should always be the cornerstone of a company’s cyber-risk management strategy.

Cyber insurance can play a complementary role to cybersecurity by helping the company recover from a cyber-attack more quickly and effectively, potentially reducing the impact of a cyber breach. This could improve the company’s image as one that prioritizes cyber security and makes every effort to protect sensitive data.

Cyber insurance can also help cover the cost of fines or penalties assessed against a company by the body responsible for monitoring its activities.

5.     Business continuity and recovery may be enhanced by cyber insurance. 

A cyber-attack can take a business offline for days or even weeks. It can take even longer to recover and repair the data files, remediate any damage, and repair damaged business relationships.

Cyber insurance can allow businesses to recover from a data breach more quickly by providing financial assistance to cover the associated expenses. With this financial safety net, a business can ensure that its recovery goes as smoothly as possible. Management and staff can direct their energies toward keeping business operations running, mending business relationships, and facilitating and taking part in training on upgraded cyber security measures.

Ensure you’re protected

Making sure your company’s cyber security efforts are up-to-date and that your employees are aware of the risks and how to mitigate them is key. But on top of that, it’s important to ensure you have the necessary coverage should something go wrong. Cyber risk coverage is designed to support your business if computer networks are breached. Visit our cyber risk coverage page to find out more!

 

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.