Countering Cyber Threats with Cyber Insurance Policies

Posted on: Feb 10, 2023 | 3 mins | Written by: HDFC ERGO Team

Countering Cyber Threats with Cyber Insurance Policies

Have you come across any recent incidents of cyberattacks? The chances are high that the answer will be yes. Over the past few years, there has been a constant uptick in cyberattacks globally. And this is even more important considering the fact that we are heading to an even more technology-dependent future. Apart from buying cyber insurance, is there anything else you can do?

India is at the forefront of technology, and there are a lot of businesses that are dependent on technology. Though this is a bright spot and will only take businesses and ideas further, this truth has a darker side. India, as is the case globally, is witnessing a large number of cyberattacks. In fact, during the first half of 2022, there was as much as a 51% increase in ransomware attacks in the country.

As we move to a more connected system and businesses get even more involved, a cyberattack can potentially bring businesses to a grinding halt in some cases. As a business, this can be quite intimidating. However, there are a few ways to prepare yourself better to handle cyberattacks. Buying cyber insurance is one such crucial step.

The impact of a data breach on a business:

The cost of a data breach is constantly going up. In the year 2020, the average cost of a data breach stood at Rs. 16.3 crores. The amount went up to Rs. 18 crores for 2021, and in 2022, it rose further to Rs. 18.9 crores. These amounts can cause severe damage to the finance of any business.

Apart from the financial aspect, a few other things can bother businesses. For example, there can be a loss of intellectual property, which can severely impact a business. Not to mention a dent in a company's reputation and, in some cases, even a loss of revenue or sales.

If a company has been involved in a data breach, customers are less likely to join hands with such a firm. It does not stop even there. In some cases, there can be legal consequences as well. Certain individuals or states can take legal action against the company/business.

These are some serious issues that a business can face in the case of a data breach. And if you do not take proper precautions, it can also dent the image of your company and its operations.

What is the role of cyber insurance in this?

A business can take a few measures to prepare itself against data breaches or cyberattacks in general. One of the most prominent ones is to invest in cybersecurity insurance. As the name suggests, cybersecurity insurance offers protection against cyberattacks. Based on the coverage you have opted for, the policy will usually cover any financial loss arising from data breaches. It can also cover expenses related to forensic investigation, recovery of data, and litigation.

When you buy cyber insurance in India, you can get protection against many cyberattacks. These include DDOS attacks, ransomware attacks, and phishing attacks. The actual coverage of your policy will largely depend on your insurance provider. But the usual costs that are not covered as a part of cybersecurity policies are any sort of hardware failures or IP theft.

Many companies buy cyber insurance plans these days, primarily due to their extensive exposure to the internet and the presence of IT systems. IT companies and banks are some of the most common buyers of such policies. It is important to note that cyber-attacks are not restricted to only these two business types. Companies that have recently ventured into digitising their products and even healthcare companies are not immune to such attacks.

What steps should you as a business take?

When you set out to buy cyber insurance in India, the insurance companies look at different aspects and factors to decide the policy premiums. Some factors include the infrastructure setup, the presence of backup systems, the security setup used by the organisation, and so on. As a business entity, there are a couple of things that you can carry out.

The measures will not only help improve the resilience of your business against cyberattacks but can also help you to reduce the policy premium by a considerable margin. Opting for multifactor authentication (MFA) and endpoint deduction and response (EDR) are two solutions.

A system that implements multifactor authentication adds another layer when it comes to authenticating users. This reduces the chances of a cyberattack. When implemented, it requires users to provide additional credentials to login into a system. It can include text messages to their phone or approval from an app, etc. The presence of EDR systems ensures that the network is constantly monitored. These systems collect information, identify threats, and respond with the required corrective measures. It is a rule-based approach and can reduce the chances of cyberattacks by a healthy margin.

Benefits of cyber insurance policies:

In recent times, a few instances of cyberattacks have brought entire businesses to a halt. One of the most famous ones is the ransomware attack on the pipelines on the east coast of the USA. All the computer equipment that was handling the pipeline was unavailable. It is one of the most high-profile cases of cyberattacks. Here are some significant benefits when buying a cyber insurance policy for your business.

1. Ensures that both small and big companies do not end up with their business being crippled due to the attack.

2. The plan offers financial coverage in the case of a cyberattack.

3. Primarily, the plan protects your business against cybercrimes and cyberattacks.

4. You can easily buy a plan online to get the required coverage for your system.

Your business might currently have some insurance plans in place. However, they might not cover damages related to cyberattacks. It is recommended that you discuss this with an insurance provider and get a policy that offers adequate coverage based on the needs of your business. The policies work great for small, medium, and large businesses with a considerable online presence or extensively using IT systems. The plan also offers coverage for first-party and third-party liabilities that result from cyberattacks.

Conclusion

The average cost of data breaches and cyberattacks is constantly on the rise. If any business is at the receiving end of such an attack, it can result in financial damage and a dent in the company's reputation. You can protect your business with the help of a cyber insurance policy and by following a few of the good practices. Above are some of these practices that you can implement in your business.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Are you a WhatsApp user? Here are the steps to avoid cyber attack

Your Guide to Knowing Everything About Cyber Literacy

How Different Cybersecurity Coverages Can Protect a Company?

The Need for Cyber Insurance for MSMEs

Reason behind the Rise in Cyber-Attacks