As computers expand into every sector of the economy, cyber-crime is also expanding; and a cyber-attack or data breach can be very expensive indeed. Insurance is necessary for any company that stores customer data, in order to guard against cyber risk and all of the related losses.
There are a number of risks associated with cyber-attacks. First of all, the company might lose substantial amounts of money and sensitive financial information to the original theft. In addition, it will probably be necessary to hire security experts to examine the extent of the breach and ensure that it doesn’t happen again.
Government rules and regulations can cause trouble, too. Many states require that businesses notify their customers via mail, set up a call center, or offer free credit monitoring, all of which can be expensive. If it is determined that the breach was the result of negligence, they may also assess fines or fees.
Finally, customers can be unhappy after a cyber-attack. They may stop patronizing a business out of fear for their privacy, and sales can take a hit. A concentrated (and expensive) PR campaign might be necessary to rebuild a customer base. Angry clients may even sue in an attempt to hold the company liable, resulting in high settlements, damages, or legal fees.
All of these expenses can ruin a company—but they don’t have to. Getting a quality insurance program is the best way to protect against all forms of cyber risk.