Technology

Insuring Information Assets

The advent of the internet has seen enormous growth in innovation and communication, enabling the realization of exciting new business ideas, worldwide media accessibility, and enhanced employment opportunities. Yet, accompanying this progress is the ubiquitous threat of cybercrime, which is becoming increasingly prevalent. The WannaCry ransomware attack on 12th May and the most recent Petya cyber attack are highly illustrative of the damage and disruption cybercrime can cause, as well as the vulnerability of many businesses to malicious cyber attacks.

Instances of cybercrime are certainly on the rise; according to annual surveys conducted by Telstra, almost 60 percent of businesses experienced at least one disruptive security breach a month in 2016, compared to just 23.7 percent in 2015. With this rising threat level, it is important to identify the types of cyber threats that are readily employed.

According to Varonis Data Security, the top three cyber threats in 2016 were social engineering, which made up just over half of all cyber threats, followed by insider threats, and advanced persistent threats. Furthermore, according to the FBI, a diverse range of companies around the globe lost more than U.S. $3.1 billion in the period October 2013 to May 2016 as a result of social engineering fraud. But what exactly is social engineering fraud, and how can you reduce your chances of being a victim?

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Understanding IT Liability

Information Technology’s hold on our world has become increasingly tighter due to the demands of our high speed, interconnected and ever-changing global society. The ever-increasing need for improved speed to market, greater competition, customer expectation, and increased reliance on outsourcing systems and data, has meant that information technology has continued to evolve with ferocity. As such, many individuals and businesses today could not fathom a world without technology.

However, as businesses come to rely more and more on Information Technology (IT) for the smooth and successful operation of their business, they are also significantly more vulnerable to litigation. IT professionals and businesses face increased exposure for the quality of the advice they provide, as well as for any damage that may be caused by the performance of the products they supply. In addition, IT companies face financial loss threats due to systems not performing as intended or not being delivered within contractual time frames, due to breaches of Intellectual Property Rights, such as copyright, trademark or register design, or due to the loss of data.

To address these issues insurers have developed Information Technology Liability Insurance, which ensures specific protection for organisations against legal liability arising from the failure of their products, services and/or advice in the conduct of their business.

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Cover your costs: privacy breach notification and cyber liability

According to the Ponemon Institute’s 2015 Cost of Data Breach Study, the average per capita cost of data breach in the United States is $217, while the average total organisational cost is $6.5 million. Comparatively, in Australia, the draft Regulation Impact Statement cited the average cost of notification at $70,000, while the total cost of a data breach is typically upwards of $2.82 million. While this is significantly lower than the cost of data breach in the United States, the economic impact of data breach for Australian businesses carries substantial weight.

In light of the Federal Government’s Notifiable Data Breaches Bill passed through the Senate this week introducing a mandatory data breach notification scheme, we consider how these laws will affect your business and the role of insurance in reducing the cost of a data breach.

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Does your IT Liability Insurance provide the right protection?

Information Technology Liability Insurance is essential for any IT organisation or company, providing a unique combination of Professional Indemnity Insurance and Public & Products Liability cover. However, the host of products available makes it difficult to determine which policy will meet the needs of your organisation and provide you with the right level of protection.

The key is to simply ask the right questions in order to determine which policy is right for you.

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Untangling Cyber Liability Insurance

As we delve deeper into the digital age, cyber risks are an increasingly important consideration for risks managers and company boards.

Previously, it was widely assumed cyber risks only existed for companies selling online. Nowadays, with a more onerous and volatile regulatory landscape (particularly the ever-changing privacy laws), more sophisticated hackers and changes in our use of technology, the impact of a data breach could have a severe impact on all companies; selling online or not. All firms now need to identify and assess their potential cyber exposures and develop strategic ways to manage these, which could include a cyber-insurance policy.

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