Cyber Risk Insurance
With the increase in the technological advancement in modern society, there is also an increasing level of crime which targets advanced technology (Biener, Eling & Wirfs, 2015). This has, therefore, lead to a reactionary measure taken by individuals, organizations and the authorities to ensure that such risks are countered by ensuring that they develop technology are not vulnerable to any malicious moves taken by the malicious individuals. The advancement in technology, therefore, has equally affected the cyberspace and thus leading to various risks facing this sphere of human life. With the ever-evolving crime, the cyberspace has faced the cyber security threats which target its IT systems. , therefore, the technology industry has reacted by developing cyber security approaches which are aimed at countering cyber risks. In the modern world, the cyberspace involves the use of the IT systems for different reasons including data storage used for various purposes such as for business and other administrative purposes such as those undertaken by the government. Individuals, organizations and government authorities have however employed various strategies to cut the risk incurred as a result of cyber risk threats. The two main strategies which have been employed include cyber risk insurance and employing cyber security measures.
Cyber risk insurance is an insurance product which individuals and organizations purchase to prevent adversities which may be caused by the cybercrime attacks aimed at tampering with the information by malicious individuals (Biener, Eling & Wirfs, 2015). The cyber risk insurance covers the cost related to the first and third parties. The aim of this product is to insulate the company in regard to the cost adverse implications which may result from the cybercrime attacks.
Some of the aspects in which this policy covers include the cost related to the investigation. The investigation process has cost implications. The investigation is geared towards forensic investigation to find out what happened, repairing what was damaged and how to prevent future occurrence by identifying the loopholes (Romanosky et al., 2017). This may involve the third party, and thus this policy will cater for this cost. Secondly, this policy involves the losses which are incurred during the period in which the system is not functional. This may also involve covering of data loss recovery and the repair of the reputation that is damaged. This policy also covers the cost related to data breach notifications of the affected parties in case of a data breach. Finally, cyber risk insurance covers the cost related to lawsuits and extortion. These are costs which are incurred during the legal battles over the leakage of sensitive information such as intellectual property among others.
Therefore, insurance companies look at various aspects regarding the systems their clients are insuring. Some of these aspects include the technical issues relating to the attack. For instance, the damages which are caused or are the potential targets by the attackers have implications in the compensation since the higher the damage, the higher the cost (Romanosky et al., 2017). Other technical aspects include physically replacing stolen or damaged computers which may be at the center of the attack. Other aspects that the insurance companies consider include legal compliance. Compensations will only be done if the company involved in the attack fully complied with the legal requirements. Other aspects which are of great concern include organizational and procedures (Romanosky et al., 2017). The organizational set up will either make an organization susceptible to any attack or prevent vulnerability to cybercrime attacks. All these aspects are the key to possible exposure to the of the IT systems to any possible attack. In assessing the extent to which exposure might occur then the insurance company will then be able to undertake possible implications on their side in the case of an eventuality (Romanosky et al., 2017). The assessment of the risk will also help set the terms basing on the findings since incase the company is liable for some of the poor practice which exposed the system for an attack then the insurance company may not take the liability.
My opinion on whether the cyber insurance policy is a viable option for the business to mitigate the risks is that it is not an absolute solution to the cyber security risk. This is because, despite the use of the modern technology to secure the IT systems, it does not guarantee hundred percent sureties that the system cannot tamper since there are various factors which cause the system vulnerability (Bailey, 2014). Some of the reasons which cause cyber-attack include the organizational factors such as the laxity in the system administration which makes the system very prone to attack. For instance, poor system security administration may make lead to vulnerabilities which could have otherwise been avoided if proper system security measures had been put in place. I believe that having a good security measure including strict regulations in matters system security reduces the chances of cyber risks (Bailey, 2014). Conclusively cyber risk insurance risk cannot be mitigated by solely taking insurance but implementing integrated approaches, including investing in system security and sealing loopholes of a cybercrime attack.
Romanosky, S., Ablon, L., Kuehn, A., & Jones, T. (2017). Content analysis of cyber insurance policies: How do carriers write policies and cyber price risk?
Biener, C., Eling, M., & Wirfs, J. H. (2015). Insurability of cyber risk: An empirical analysis. The Geneva Papers on Risk and Insurance-Issues and Practice, 40(1), 131-158.
Bailey, L. (2014). Mitigating moral hazard in cyber-risk insurance. JL & Cyber Warfare, 3, 1.