Many business owners know that cyber breaches can lead to significant financial liability if an affected third party takes legal action. However, it can be easier to overlook the immediate costs that a business may face even if no claims are made. Fortunately, a strong cyber risk insurance policy can address many of these expenses, including the following ones.
Legally Mandated Measures
After a cyber breach, businesses are required to take several actions. These include investigating the breach, giving notice to people who were affected and setting up an information center for these people. Businesses also generally must provide ongoing credit monitoring for affected clients or employees. These undertakings can quickly become expensive.
The short-term disruption or long-term loss of business associated with a cyber attack can also prove costly. Businesses may face all of the following expenses:
- Lost revenue if operations ceased due to a cyber attack
- Costs of getting the business up and running again
- Expenses associated with publicly managing the situation and maintaining client trust
General business interruption policies may not cover these costs, which makes cyber risk insurance especially important.
Ransoms or Extortions
Some attackers extort money from businesses by threatening a cyber attack if a ransom is not paid. Cyber liability insurance may cover this cost, provided that a threat is found legitimate and capable of significantly affecting a business.
These potential costs underscore why most businesses can benefit from purchasing cyber liability insurance. Cyber threats or attacks can introduce various unique and potentially crippling expenses. The right insurance policy is the only way that business owners can truly ensure protection against this threat.