Fall 09 Winter 10 Newsletter
Understanding and Identifying
Cyber Risk
Written by Joseph Weipert CIC, ARM,MBA
With the birth of the internet in 1983, the “cyber” industry has continued to grow at a staggering pace, expanding our world through research, communication and business. In addition to the benefits the Internet has added to our lives, we have also opened ourselves and our businesses to new areas for disruption, loss and litigation. Over the last several years, the Internet has revealed many unexpected losses for individuals and businesses through breach of security, copyrightand trademark litigation. Surprisingly, it is not just the technology companies that offer software or computerservices that have cyber exposure. As many businesses seek new revenue generating opportunities and improvements to customer service, they have turned to technology and the Internet. Who would have thought an attempt to improve customer service or speed up receivables through a web page bill payment system could create liability issues? As you contemplate what cyber risks you may face, ask yourself the following questions:
- What if computer hackers penetrated your system and gained access to customer information ~ does your company have coverage?
- How might the addition of e-commerce to your company’s website add to your company’s liability?
- How can a simple link from your company’s own webpage cause an issue?
- Does your company’s advertising, for its products or services on your webpage, increase or decrease your liability?
- Have you ever reviewed your contracts to identify what liability your company may be assuming by offering products or services through the Internet?
- Have you obtained permission to post pictures or use other’s logos on your webpage?
- Are you prepared if your company is a victim of a cyber attack?
- To what extent may a cyber attack cause property loss or business income loss?The previous questions illustrate a fraction of exposures and concerns created by technology and the Internet. A lot can be done to reduce or eliminate exposures through better understanding of the coverage’s you currently have and do not have. Not all exposures require an insurance policy to control or avoid a loss.
Contracts can also have a dramatic impact on your exposure to liability as a result of the acceptance or transfer of risk. However, some exposures are best solved by a technology errors and omissions policy (cyber liability). Often we think of war being fought with bombs and bullets, but there is a silent attack that can be equally devastating called a cyber attack, using only a computer. With the increase in electronic productivity our lives are more exposed then ever to an attack that can grind our business and services to a stop. The number of cyber threats we face daily are becoming staggering. Remember too that planning for cyber attacks should be considered when putting together an Emergency Plan.
It is essential to conduct a risk analysis to identify exposures you may have and to what extent they exist. Purchasing a cyber liability policy may not meet your needs at all. In fact, without a thorough analysis of risk and coverage you may end up buying a cyber liability policy that only partially meets your needs. You may be surprised to find a policy may cover little, if any, of your exposure. Acquiring a technology errors and omissions policy is not as simple as it sounds. In fact, it’s rather difficult to find the “best fit” for your exposures. There are a number of “cyber policies” available on the market and they are quick to change. Not all cyber policies are created equal. Many offer broad coverage, while others are very narrow and only provide limited coverage. It is critical to understand your risks and work closely with your insurance advisor to secure the appropriate coverage and advice you need. One of the most essential parts of coverage for cyber liability includes CPNI or “Red Flag Rule” issues. Red Flag Rules, if not complied with could create legal and or punitive issues for any business that has personal information of “clients”. Please give us a call with any questions regarding your insurance needs.
NFU Insurance West, LLC
PO Box 150368
Lakewood, CO 80215877-987-8281 Toll Free or 303-984-2000
Fall—Winter 2009 Newsletter—Cyber Liability Exposures
Visit us at:WWW.NFUINSURANCEWEST.COM - To what extent may a cyber attack cause property loss or business income loss?The previous questions illustrate a fraction of exposures and concerns created by technology and the Internet. A lot can be done to reduce or eliminate exposures through better understanding of the coverage’s you currently have and do not have. Not all exposures require an insurance policy to control or avoid a loss.
