We have all heard about the large scale cyber breaches that have occurred to companies such as Target, Adobe, Sony, and most recently Equifax. Unfortunately, these type of attacks are occurring to businesses of all sizes. Travelers Insurance reports that any business using technology or collecting data is at risk of a cyber attack, and the results can be catastrophic. One study suggests the average cost to rectify a data breach is now at $7 million dollars. Without a dedicated cyber policy, most businesses do not have adequate insurance coverage following a data breach.
Every business has an exposure to data breach. Doctors and dentists store personal information on each patient. All retail stores, including restaurants, have personal data from the credit cards their patrons use. Any business with a website taking orders from customers is a potential victim. Each of these businesses maintains sensitive data that a cyber thief would love to get their hands on. It’s money in their pocket.
And…. it’s money out of yours. Central Insurance estimates that easily quantifiable post-breach costs can arise from:
- Customer notification: $1-2 per person.
- Consulting help for forensic research and data recovery: $250-300 per hour.
- Credit monitoring subscriptions: $10-20 per person.
- Credit card reissuance fee: $20-30 per card.
- Legal fees: $400-600 per hour.
- Information hotlines for customer support: $5+ per call.
Additional costs which are difficult to estimate:
- Public relations activities: cost varies widely.
- Technology changes and staff training: potentially thousands of dollars.
- Reward expenses: thousands of dollars.
- Extortion demands: impossible to predict.
- Replacing stolen funds or securities: impossible to predict.
Some estimate the overall cost per record is approximately $200. When you think about how many client names are in your database, that total can add up in a hurry.
Because the month of October has been designated as National Cyber Security Awareness month, we would like to provide you with more information regarding the costs of cyber crime, cyber attacks to watch for, how cyber insurance works, and how to protect your business. As technology becomes more complex and sophisticated, so do the threats we face. As your insurance advisor, we encourage you to be prepared with both cyber liability insurance and an effective cyber security plan to manage and mitigate cyber risk.
Is your business at risk? Please let us know how we can help by contacting us today.
Curtis M. Bull, Vice President of Commercial Lines
The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only.