Cyber Insurance - A Way For Risk Mitigation

Cyber insurance mitigates financial risks arising from security breaches

- Sanjeev Srinivasan

The recent spike in occurrence of cybercrime across the globe has made it obvious that it is no more a question of “whether” but a question of “when”. The average cost to the organization of these breaches is estimated to be close to 5 million USD. Multiple analyst reports place the average cost per breached record between USD 78 and USD 277. This cost is attributed to investigation and remediation activities, notifications to be sent to customers and other stakeholders, change in credit worthiness, reputation management, legal fees and settlements and any regulatory fines arising from the breach. Add to this the intangible loss to the brand value and the change in customer behavior in response to the breaches.

Organizations no more have the luxury of imagining that they will not be targeted by malicious hackers. Remember that the hacks need not just target the data an organization holds - the compromised systems can also be used to launch an attack on third parties it interacts with. In such a scenario, the organization may be held liable for the damage caused to the third parties. While a commitment to security is must, it is impossible to make any system 100% foolproof. As such, it has become inevitable for organizations across industries and sizes to develop a good cyber risk management approach.