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Companies Need Insurance Policies to Address Cyber Risks

With company extremely reliant on a computer network for their operations, including the storing of sensitive and confidential materials, the risk of being targeted for an attack runs high. Any company storing private customer data on their servers, for clients as well as employees is running a huge risk and therefore need protection. Data Breach insurance coverage can provide your clientele with such protection.

Technology will continue to play a big role in business, which means that companies will to be exposed to those emerging cyber risks. Businesses must spend more time reviewing their data security standards along with validating risk management practices. Many customers, because of all the news stories involving security breaches at large retail chains and even government institutions and major banks, are now requiring proof of insurance that these privacy breaches will be properly addressed.

Federal and state regulatory agencies getting involved

Both federal and state agencies have put increasing responsibility for privacy and network security breaches on businesses. Corporations that have received letters notifying them of a security breach have been impacted by these regulations. For years now, the Internet has been a highly resourceful delivery channel for information, billing, referrals, and research.

We have improved the operational efficiency of many business models, but unfortunately, this has also brought new responsibilities and unprecedented risks.

The accessibility that the Internet affords us has additionally increased our vulnerability to theft, alteration or disclosure of personally identifiable information, which can affect an organizations earnings, reputation, and operations. Unfortunately, these infiltrations often come at the hands of trusted employees or even vendors that the company regularly does business with.

Even while most companies carry a general liability policy, which provides protection against suits from third parties alleging bodily injury or property damage, these traditional insurance policies don’t provide the type of coverage needed with regards to network liability, failure to protect, or wrongful disclosure of personally identifiable information.

Since we are now dependent upon the Internet for most of our daily interactions, the rise in potential losses that can run into the millions is a growing concern. Therefore, your clients should realize the risks that are involved and purchase liability policies. Data breach insurance coverage should be considered part of a comprehensive cyber risk management program.