Cyber Risk Is Trending
While the decision to limit distribution of The Interview was quickly reversed, Sony Pictures, actors, filmmakers, producers, online channels and media retailers all share an acute awareness of cyber risks.
And although consumers are now free to download, stream or purchase a copy of The Interview, the delay of this Hollywood release demonstrates the domino effect of cyber risk that businesses must now take into consideration.
According The Precept Group Inc., companies like “Kroger Co., Best Buy Canada, Capital One, Target, JC Penny, the Canada Revenue Agency and Sony” all have one thing in common. They were “victims of a data breach in the last couple of years, totaling millions of stolen records that include personal information, such as social insurance numbers, credit card numbers and bank account numbers.”1
Cyber Risk Caused by Hacker Attacks
“Sony learned a hard lesson in 2014: most standard commercial insurance policies do not cover business interruption as a result of cyber-related circumstances or a technology failure. Downtime as a result of a cyber attack must be insured by business interruption insurance.
Overall, policyholders are retaining a larger portion of business interruption risk through percentage deductibles and limits on coverage (for example, a policy might limit or exclude cover for named events like windstorms, earthquakes, floods or other catastrophic events).”2
Cyber Risk Can Lead to Business Disruption
The Precept Group also notes that “Cyber crime has evolved into a dangerous threat. Attacks continue to dominate the news, with the hack of Sony in late 2014 capturing the most media attention. The motive for a cyber attack runs the gamut from theft of intellectual property to political or social activism. If there is anything to be learned from 2014, it’s that no company is immune to cyber crime.
Fuelling the desire for cyber liability and privacy insurance is a recent report by IT World Canada, which showed the average cost of a data breach has increased by 15 per cent, costing companies an average of $145 per lost or stolen record. Insurers are working to better understand cyber risk and formulate more options for stand-alone cyber coverage. In the meantime, many clients are opting for ‘cafeteria-style’ policies that allow the insured to pick and choose which risks they want to insure.” 3
In the Market for Cyber Liability Insurance?
Despite many well-publicized online breaches, the insurance market offers good value to first-time buyers of cyber liability coverage. And when managing your cyber risks, a business continuity plan can make the difference between a brief interruption and complete disruption of your operations.
An ALIGNED advocate can help you evaluate available insurance options and secure the best products, services and solutions for your business.
To learn more about ALIGNED, our commitment to providing insurance expertise and the best insurance products or solutions, talk to one of our advocates today.
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Sources: 1,2,3 P&C Market Outlook 2015, page 11, 12;