Risk Alert - Cyber Liability | Towergate Insurance Brokers

9/14/2022 12:00:00 AM

Risk Alert - Cyber Liability

Since most businesses in the UK now use the internet, email or cloud technology as an integral part of their operation, they become ever more reliant on technology. This increases the vulnerability of each business to electronic security threats. A UK government report found that 60%* of small businesses had suffered a data breach in the last year; a further 16% of small businesses experienced a ‘denial of service’ attack, effectively making their computer systems unusable.

The most common terms for the issues (threats) associated with cyber include:

Data breach
Viruses
Hacking
Employee error

Cyber insurance and the continually changing environment

Because the use of technology in our everyday lives has increased, criminals can now access information and data like never before. It is important that you to take steps to protect your organisation from cyber-attacks and stay safe online.

Warnings since the Ukrainian invasion

Since Russia invaded Ukraine in January, the National Cyber Security Centre have been sending out warnings to UK organisations regarding making sure that cyber and digital defences are in place and are reliable should any sudden cyber-attacks happen.

While the NCSC is not aware of any current specific threats to UK, it should be made clear that there is a pattern to cyber-attacks happening when there has been other historical crisis’ such as COVID-19 and this could just be the latest in a list of international consequences.

How at risk are you?

To find out your organisation's level of cyber risk, complete this quick cyber risk assessment.

Assessing the risk to your business?

In most small and medium sized businesses responsibility for data control under the Data Protection Act lies with the owner of the business. The loss of personal or customer data can bring significant financial loss and/or prosecution. Any attacks could also significantly impair the company’s ability to operate. Therefore if your business:

holds sensitive customer details such as names and addresses and banking details
is heavily reliant on computer systems to conduct its business
has a website
is subject to a payment card industry (PCI) merchant services agreement; then it could be vulnerable to a data breach or loss of vital business service

What can you do? - Three simple steps for protecting you and your business

There are a number of risk management and risk transfer strategies that can be undertaken to minimise the exposure:

Identify and understand the risks - understanding the exposure of the business enables a number of bespoke precautions to be put in place such as; a business security plan, the encryption of sensitive data, secure and hide wireless networks, install and maintain anti-virus software and firewalls, restrict employee usage of non business related web sites and carry out daily backups of data.
Planning ahead - the process of Business Continuity Planning (BCP) identifies potential threats to the business, evaluates the threats and determines the action required to minimise the effect that any resultant losses will have on the business. A viable BCP will also ensure that staff, customers and suppliers are reassured that there are effective policies and practices in place to manage the unexpected.
Risk Transfer - Many traditional liability and business interruption insurance products do not address the full range of risks associated with e-commerce and the internet. A Cyber Liability policy will fill the gap in the protection of your business by including your own losses (first party) and third party losses (claims against the business by others). First party protection covers your businesses for costs of notifying customers and regulators and will also include network interruption to your computer systems which cause your business to be disrupted with the resultant loss of revenue. Third party exposure involves the financial risks relating to loss or breach of personal or confidential information contained on your systems and protects you against claims for damages from data subjects resulting from the loss of their confidential information.

Take simple security actions to protect your business

There are also simple best-practice points you can take and make sure are embedded in your organisation's culture, such as:

Investing in antivirus software
Always locking screens when away from desk
Two-factor identification systems
Limiting the sharing of information
Using complex passwords; a phrase or statement is best
Requesting password changes regularly

Cyber insurance protection available

Cyber insurance can help protect your business against a range of cyber threats and exposures, including cybercrime, data breaches and system interruption. Top activity areas for cyber-criminals include:

Ransomware
Phishing
Data leakage
Hacking
Insider threat

How can we help?

Given the significance of this particular risk, your existing service team will be available to discuss your options and can be included in your next review process.

What is covered by a cyber liability policy?

Practical support in the event of a data breach
Compensation for loss of income
Payment of the costs associated with regulatory investigations
Reimbursement for the costs of repair, restoration or replacement
Defence costs and damage awards if you mistakenly infringe someone’s copyright
Forensic Investigation costs
Legal advice
Notifying customers or regulators
Support service – offering expert help and guidance
Damage to reputation
Claims for damages made against the business
Civil Penalties levied by regulators
Inadvertently libeling a third party in an email or other electronic communication methods
Reinstatement of data
Credit monitoring to affected customers
Compensation costs
Actively work with the business to minimise losses

*Source: ‘Don’t get locked in Cyber Space’, Hiscox Underwriting Ltd.

Cyber insurance from Towergate

Towergate are actively engaging with insurers and our clients to obtain cyber protection for businesses of all sizes, to protect against the very real and growing threats of the digital age. We can offer cyber insurance for businesses to help protect you should the worst happen.

You can find more information about how cyber insurance can help your business in our cyber information hub, get a quote online, call us on 0330 123 5144 or email newcare@towergate.co.uk.

Alternatively speak to your usual Towergate advisor.

About the author

Mark Brannon Cert CII is a respected industry leader with over 17 years’ industry experience in a variety of roles within the business insurance sector. He works across a wide spectrum of insurance product and policy development, delivery and optimisation for clients, including claims, insurer relationships, marketing and communications, and risk management.