Cyber Security Insurance
Cyber risk can come in many forms. The term sounds futuristic, but in reality the risks are present now. Some of the risks do relate to new and emerging technologies such as driverless cars and drones. However, often the risks are closer to home. You will have heard about recent high profile hacking events but you may not have worked out that effectively everyone with a computer is at some risk of hacking.
According to The Institute of Risk Management, cyber risk means any risk of financial loss, disruption or damage to reputation arising from some sort of failure of information technology systems.
You may ask whether this threat is a real one or whether it really only applies to high profile celebrities. A recent article in the Guardian recited the case of Peter and Sarah Holmes, both in their 80’s and from Yorkshire. A retired headmaster and his wife lost their life savings to fraudsters posing as TSB banking investigators, who convinced Mr Holmes to move cash to a bogus Barclays account. Their case is worrying for those with elderly relatives. Last month the Office for National Statistics said there were 5.8 million incidents of cyber crime in the UK in the past year and that 1 in 10 adults had lost money as a result. This suggests the threat is real enough.
When considering what positive action to take, there are clearly practical steps to minimise the risk. You should also give consideration to obtaining appropriate insurance cover in the event that a problem arises. Practical steps start with looking at your computer network security and malware protection. Connecting to untrusted networks (such as the Internet) can expose you to cyber attacks. It is more important than ever to have antivirus software in place.
On the insurance front, most standard insurance will provide little or no cover for these risks. It is likely that a specific policy will be required. Such policies are not new but they are now a little more widely available and financially affordable. Careful consideration will need to be given to the requisite cover. Whatever your needs, it is a good idea to speak to your broker or current insurance providers in order to discuss the possibility of cover. One area of cover that may be of assistance is in relation to legal expenses insurance. In the event of a cyber loss, there may be legal avenues to recovery but these are likely to involve litigation. Litigation in such circumstances can be costly and having “before-the-event” legal expenses insurance can therefore be very helpful.