By Intact Insurance Company
As Internet use continues to grow and web-based technologies proliferate, more and more personal information is being exchanged electronically, and faster. The trend shows no sign of slowing; in fact, it is accelerating.
Many companies use online tools for faster and more direct contact with their customers. Despite all the security precautions they take, there are risks to the confidentiality of the data they collect and store, and the threat of breaches is an increasingly salient issue.
Of course, when you think “risk”, you think “insurance”. It’s not surprising –in fact it is reassuring – to see that a number of insurance companies now offer various solutions to protect businesses from what are called cyber risks. But what exactly do we mean by “cyber risks”?
Cyber risks are for real
Not everyone uses the same definition of cyber risk, but in general the term refers to the risk of a “data breach” or “privacy breach”, which in turn means the loss, theft, release or publication of personal information about a business’s customers or employees.
A privacy breach may be caused by the loss or theft of laptops, smartphones, USB keys or paper files. It may also result from a computer system or network being hacked or infected with a virus.
The threat of cyber risk in Canada is growing, and the number of cybercrimes has risen rapidly in the past few years. Cybercrime affects large corporations and small business alike: about 31% of reported breaches involve companies with fewer than 100 employees1. As well, 71% of small to medium-sized enterprises say they have been victims of a privacy breach2. As Nick Cinotti, Manager of Loss Prevention – Specialty Solutions at Intact Insurance, said during a webinar with a panel of cybersecurity experts: “Contrary to popular belief, businesses in every kind of industry are prone to intrusions into their computer systems – not just in the banking, financial and health sectors.”
A data breach can be costly
Are your business insurance customers aware of the dangers of cyber risks? A cyberattack can have serious consequences – and not only in financial terms. Companies that process and store data about their customers and/or employees are especially vulnerable.
According to 2013 figures, 51% of businesses who reported a privacy breach were hit by service downtime, while 43% suffered a loss of productivity3. Knowing this, it is important for you to make your commercial lines clients aware that this is a serious problem and it is essential for them to protect themselves.
Effective coverage does exist
Insurance companies have developed several types of coverage to protect businesses from the damage a security breach can cause. As a broker, you can offer insurance to cover remediation expenses as well as business interruption and extra expense coverage. These can mitigate the impact of a breach of customers’ and employees’ privacy. While this protection is very useful, the ideal approach is to combine multiple initiatives focused on prevention, in order to avoid such events entirely.
Awareness is key
Did you know that 75% of privacy breaches in the private sector are opportunistic attacks that could have been avoided if basic security procedures were in place and being followed1?
Take the time to share information like this with your customers, to make sure they are aware of the dangers of cyber risks. It would also be beneficial to provide advice on how to assess their organization’s potential security weaknesses and the controls they should implement. Finally, you should work with them to help make preventing cybercrime a priority for their business.