Tags: Businesses | Cyber | Insurance | Investment Risk

Businesses Without Cyber Insurance Are an Investment Risk

By    |   Monday, 11 May 2015 06:28 AM

We live in a computerized world. Except for those few awfully hardy folks living, as they say, off the grid, the rest of us are tied into the internet in everything we do.

Every detail of every business and everyone's personal life is being somehow recorded as electric blips and pulses on a computer server. We are no longer individuals, but are data.

At one time if we were going to be robbed, it would have to have been up close and personal. Now wealth is found in data located on a server and the hackers can easily pull off their theft from places quite literally half-way around the world.

In spite of all the brilliantly imaginative people who created the wonder of the internet world, they have not yet been resourceful enough to develop any foolproof mechanism or software that will absolutely protect their beautifully orchestrated integrated computer systems from the newest generation of resourceful crooks.

When data gets stolen from any business, liability for losses follows.

It is not just the big guys that get hit. Small companies or retail operations, and professionals like doctors, accountants, and lawyers all are facing what should be considered as a likely to occur risk that could involve significant if not otherwise catastrophic financial losses.

The insurance industry is just starting to catch up with this new financial threat.

How is the insurance industry going to be able to underwrite the cyber-risks regarding any particular business or service?

There are no records showing a history of losses, no reliable standards as to what is a secure computer system, no coordinated information sharing mechanism or organization, nor industry-wide accepted procedures to even create an appropriate risk management analysis.

Fortunately, the insurance industry is developing some additional capacity to meet the growing demand for cyber-risk insurance coverage. Although this is still evolving, there is are at least some professionals who have the breadth and depth of experience and knowledge to be able to properly advise in this emerging specialty.

I think this likely will be an area will business will need its outside legal counsel to take lead. Given the fact that litigation should be anticipated as a consequence of any sort of cyber breach, it would be prudent to make sure that the planning effort, including obtaining insurance coverage, should be an effort undertaken under the umbrella of the attorney-client and work product legal privileges.

Clearly, business operations having a good cyber risk management program and corporate governance which includes cyber risk insurance will be far more attractive to investors looking for safety of their investment than other potential investment opportunities that do not.

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Kleinfeld
Business operations having a good cyber risk management program and corporate governance which includes cyber risk insurance will be far more attractive to investors looking for safety of their investment than other potential investment opportunities that do not.
Businesses, Cyber, Insurance, Investment Risk
441
2015-28-11
Monday, 11 May 2015 06:28 AM
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