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Business viewpoint: Cyber Security Insurance a likely must have for business
It’s been a battle for the headlines between the COVID-19 pandemic and major ransomware attacks.
In 2022 it will likely be more of the same. Cybercrime statistics get wilder each day. Regardless of how big, or small, your business or industry is, it’s not if — but when, a cyberattack will happen.
Cyber liability insurance is quickly becoming a big industry and will likely be a must-have for nearly every organization. Here are three things to know to better protect your business.
1. What is cyber insurance and is it something I need for my business?
In short, cyber insurance can encompass a wide range of insurance policies to help cover financial losses from cyber events and incidents. Additional cyber-risk coverage can help with the cost of remediation, legal assistance, investigators, crisis communicators, and customer credits or refunds.
Currently, there is no standard type of cyber insurance. A traditional business owner policy does not cover a cyberattack or the collateral damage that may result from one. Adding cyber insurance adds that extra protection.
2. Is cyber insurance required?
The answer is both yes and no, but the situation is fluid. Two acronyms to be familiar with are NIST and CMMC for compliance requirements.
National Institute of Standards and Technology-U.S. Department of Commerce (NIST)
This is a voluntary cybersecurity compliance requirement with an outline of best practices to help determine the time and money needed for cybersecurity protection. For more, go to www.nist.gov.
Cybersecurity Capability Maturity Model Certification (CMMC)
CMMC was released by the Defense Department in early 2020 to measure defense contractors’ capabilities, readiness, and sophistication in the area of cybersecurity. The goal is universal CMMC compliance by 2026, affecting more than 300,000 companies in any part of the DoD supply chain.
3. How do I get cyber insurance for my business?
Be on the lookout for a questionnaire from your liability insurance company to review cyber security practices before offering or renewing a cyber security policy.
This will likely require a professional IT service to review and remedy any security concerns within a cyber security audit.
Beware of service provider promises that claim they can ensure your company data is bulletproof. They are not being completely honest with you.
Cyber insurance policies will require implementing critical controls to reduce the risk of cybersecurity incidents.
Most cyber insurance carriers will require companies to offer two-factor authentication, commonly called 2FA or Multi-Factor Authentication (MFA).
It’s a long, winding, and costly road ahead for cybersecurity and cyber liability insurance.
A 2020 AdvisorSmith study reported the overall average cost of cyber insurance is $1,485 per year, depending on the nature and size of the business and its location.
In Oklahoma, the average cyber insurance cost was $1,513.03 per year.
Cyberattacks will happen; however, cyber liability insurance is an increasing part of an essential protection plan for your business.
Chris Leffingwell is Founding Partner of VIP Technology Solutions, a Coweta-based communications technology provider for businesses.
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