Press Release

Press Release

Date: February 2012 

The Rising Costs of Risks in Cyberspace 

While legislation struggles to keep pace, insurance steps in to help

Business risk in cyberspace is getting expensive.  Data security breaches and social media activities are two red-hot issues that expose businesses of every size to huge financial and reputational risk.  With legislators on both sides of the Atlantic rushing through new laws to keep up with this new reality, media and technology firms turn to specialist insurance, which can move more swiftly to provide much-needed protection.  La Playa’s Matthew Clark provides a checklist of essentials and case studies.

The business environment has changed – with online transactions growing, wider use of social media, a move towards virtual networks and cloud computing, greater use of remote access, wireless networks and outsourcing of critical services.  While the efficiency benefits are huge, each step deeper into cyberspace involves significant and very real risk. 

When things go wrong with data privacy, it can be expensive: the costs of breach detection, crisis management, notifying affected customers, hiring PR consultants to minimise reputational damage, legal and forensic investigation costs and lost business soon mount up. 

  • Average organisational cost of data breach is 1.9M GBP
  • 25% of Internet users have been victims of cybercrime; that’s 14 victims worldwide every second
  • 40 new malicious programs are released onto the Internet every minute
  • The most common cause of a data breach was “negligence” (41% of cases), followed by “malicious or criminal attacks” (31%)*.

*Research by Chubb Insurance

“Privacy is a red-hot issue right now, with high-profile breaches all over the press.  No matter how great your systems, it’s critical to get the right insurance in place”, says Matthew Clark, Science & Technology Director at specialist broker La PlayaAnd because the Internet and IT networks are increasingly international, businesses are often exposed to liability in foreign territories – so you need a policy that protects you wherever you’re sued”.

It’s crucial now that all media and technology businesses work with a specialist insurance broker who really understands the risks and pressures in the sector and can customise both the shape and size of their coverage to fit the individual business.

Checklist for protecting your business online: Cyber Insurance can help protect a business against a range of risks – make sure you consult a specialist broker to help you get the right levels of cover customised for your specific risks:

  • Media & Content Liability – comprehensive media liability including cover for user-generated content
  • Defamation – covering your exposure to allegations of libel, slander or disparagement
  • Intellectual Property Rights Infringement – protection against allegations of content infringement, including copyright and trademarks
  • Breach of Confidentiality – critical defence against allegations of violation of privacy or breach of confidential information
  • Business Interruption – covers lost business revenues due to hacking, viruses, network failure or cyber crime
  • Cyber Liability – cover for third party financial losses arising from data theft, denial of service incident, hacking or virus attack
  • Jurisdiction – because the internet is international, so is your liability exposure – you need a policy that protects you wherever you’re sued

You may also need to arrange additional coverage for Fraudulent Acts (damages payable as the result of, for example, the fraudulent use of an electronic signature) and Data Extortion (protection against the threat of extortion – for public figures, for example) depending on your risk exposures in these areas.

Case studies:

Cyber Crime: an IT director who was dismissed by his employer took revenge by deleting valuable data. The ex-employee was jailed for the hack but the company incurred hefty recompilation costs.

Data Breach: a local government agency lost an unencrypted memory stick with details of young people’s health records as well as their ethnicity, prompting a costly investigation.

IP Dispute: an importer of computer chips that allowed people to play pirated video games infringed copyright and broke foreign laws forbidding the circumvention of copy-protection technology – resulting in a costly lawsuit. 

Technology Failure: a bank’s mobile phone banking application contained a security flaw resulting in sensitive information being saved in a hidden file on users’ phones.

Retailer Neglect: an electronics retailer was hauled over the coals for allowing sensitive customer data to be dumped in a skip next to one of its stores. 

Click here for additional information (www.laplaya.co.uk/brochure/)

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“I would highly recommend [La Playa] to any technology business that is looking for expert but straight forward insurance advice.”

Michael B, Venture Capitalist

 

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About La Playa Science & Technology

Specialist & Independent

Specialist & Independent

La Playa's specialist Science & Tech team can help you protect your business with smart, flexible, high-performance insurance - with a friendly human UI. We understand the risks and pressures you face - and we speak your language.  We’ll support you with great advice - helping you make good decisions for your business. 

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…from an expert who understands you

Tech-based business is 24/7, global and borderless, exposing you to new risks and liabilities - often in unfamiliar places. As the law struggles to keep pace with technology, insurance can provide a real safety net if you fall foul of changing legislation.

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Juliet Allan

MARKETING DIRECTOR

Direct Dial: +44 (0) 1223 200658

Email: juliet.allan@laplayainsurance.com

Twitter: @julietallan