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When an organization's leaders start researching a cybersecurity insurance policy, chances are it is due to concerns about the risk of a data breach or a technology disruption caused by malicious behavior.
While the first line of protection should be preventative cybersecurity measures -- such as firewalls, intrusion prevention systems and business continuity and disaster recovery policies -- a cybersecurity liability policy at the ready can provide additional piece of mind.
Always remember, however, that a cybersecurity insurance policy will not protect the organization from the overall destruction that a cybersecurity incident can cause. Instead, it is only there to cover the financial risk incurred in the aftermath. Coverage may include the liability of lost personally identifiable information, the damage to technology assets, the cost of business interruptions and the legal expenses that come along with many of these issues. Depending on the business -- and the criticality of the cybersecurity incident -- the recovery costs can vary greatly.
If the organization collects data from U.S.-based customers, its leaders should keep in mind that they must adhere to data breach notification laws. From a legal perspective, many businesses purchase cybersecurity insurance for this reason alone.
Some organizations are satisfied with their own cybersecurity protections but fear breaches of third-party entities with which they interact and share data. In these types of situations, third-party cybersecurity insurance covers these types of external risks.
The good news is that the cybersecurity insurance business is more than a decade old. That means there is enough data available that can help an organization determine what type and level of coverage it needs based on its own unique threats and business needs.
It is advisable that leaders of the organization contact multiple reputable cybersecurity insurance policy providers and let each develop a policy that security leaders can consider. These leaders can then decide which policy provides enough coverage without going overboard. When a business obtains the right policy to cover the organization's unique risk exposure, cybersecurity insurance is always a worthy investment.
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