5 Cyber Risks for Technology Companies
Cyber risks are omnipresent for technology companies, yet almost half of companies reported not purchasing cyber insurance coverage according to the 2020 Travelers Cyber Risk Index.
“Preventive measures alone likely will not be enough to protect tech companies from a cyber loss,” said Tim Francis, Travelers’ Enterprise Cyber Lead. While the average total organizational costs of a breach for U.S. companies topped $8.5 million in 2020,1 the complexity of meeting state and federal regulatory requirements can also be daunting for tech companies in the wake of a breach.
Here are 5 additional risks for tech companies to consider, along with how Travelers CyberRisk Tech insurance can help.
1. Social engineering fraud. Phishing attempts, where employees receive seemingly legitimate emails from a trusted vendor or client, can lead to employees sending money in error to a fraudster’s bank account.
The optional first-party insuring agreement in Travelers CyberRisk Tech coverage can cover direct loss of “money” or “securities” directly caused by “social engineering fraud.” Money is defined to include “virtual currency”.
2. Business interruption from system failure. Software conflicts due to system updates or other system failure could accidentally shut down your network and lead to lost sales and lost business income.
To protect against this, consider adding Travelers first-party coverage for business income loss directly caused by “system failure,” defined as an accidental, unintentional and unplanned interruption of a “computer system.” This does not include outages caused by a “security breach” or the interruption of a third-party computer system or network.
3. Privacy breach notification. After the theft of sensitive customer data, the costs for notifying customers and providing credit monitoring services can quickly add up. Other costs can include providing a call center to handle customer inquiries.
For reasonable costs or fees you incur or pay that result from an actual or suspected “privacy breach”, Travelers offers reimbursement coverage that can also help customers comply with any security breach notification law that applies to them.
4. Confidential business data breaches. If a cyber criminal steals confidential information such as purchase history or financial records of your customers, many cyber policies may not provide coverage because they apply only to breaches of personal identity information (PII).
Travelers’ CyberRisk Tech coverage is not limited to PII data, offering policyholders broader protection following a security breach.
5. Cyber Extortion. The threat of ransomware is growing significantly, and technology companies of all sizes are at risk. If your business systems are compromised it can take significant financial resources and efforts to retrieve systems and resume normal operations, if that is even possible.
CyberRisk Tech offers reimbursement coverage for ransom paid at the direction of a person or organization that threatens to access or disclose confidential information about your customers or commit or continue a security breach to a computer system.
Other coverages available from Travelers include public relations costs coverage, dependent business interruption, and regulatory proceedings coverage.
Privacy and security breaches can be very costly for high-tech manufacturers. Discuss the range of risks for your business with your agent or broker.
1 Cost of a Data Breach Report 2020
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