Years ago, when we were complete newbies to computers, data loss was a frequent occurrence. Files were lost as they were not saved or else power cuts played culprits. We saved our work on floppy disks, and CDs, remember? But the problem was that they frequently got corrupted. I once had to redo the entire year’s marksheet for my class at the 11th hour!
And then we learnt how to backup on the hard drive itself and what a relief that was! But then whoever had access to the computer could access the saved data and copy/wipe/misuse it. Also, if the device crashed, we needed a technician to retrieve it from the drive. So, we learnt how to take backups on external drives, for safety and better storage. And now of course, there’s cloud storage.
We have also seen how data can be compromised in the process of transmission, device theft or hacking. Such losses not only disrupt peace of mind but also affect business dealings. It may have various consequences- ranging from temporary inconvenience, loss of peace of mind and of personal information to more serious ones like cancellation of deals, redoing entire projects and loss of client details. These are broadly termed as the costs of data loss.
How would you peg the cost for loss of data like contracts or financial details or client credit card details, identity documents or contacts? Add to this cost the price of time loss, opportunity loss, productivity loss and even client and business deal losses and you will know how serious the matter is. In this competitive world, no company can afford a breach, but it is happening and may happen more frequently, given the rise in cyberattacks.
No doubt we have very good security policies in place that help us stay safe from known attacks and thefts. There may also be contracts with server providers for compensating time and opportunity losses arising from data loss. But they do not compensate for data loss. For that we need cyber insurance.
What is cyber insurance? It’s like your normal insurance offered to protect against internet-related losses in business. The insured can compensate for delays and losses and compensation demand from affected parties. A cyber attack like a malware or ransomware can cause serious harm to a company’s reputation, financial position and business models. If client data is breached and falls in the wrong hands, then it becomes quite difficult to rebuild the seller-client trust. It can also be expensive to compensate clients for losses suffered and herein lies the advantage of an insurance.
Do you and I need it? Depends on what kind of data you and I are storing and how, and the extent to which we would be affected if that data is compromised. Most of you supermoms would be entrepreneurs working from home, and may have important data stored on your tab, the loss of which may cause you inconvenience. Many of us may overlook the security part of the processes and hence, a cyber insurance can save your day. Small businesses can also gain from insuring their data and more and more firms are expressing interest in insuring their data.
Future prospects- Cyber insurance is slated to be big in the coming years, with the market likely to reach USD 14 Billion globally by 2022. And why not, for after all it stands to reason. We insure everything that’s precious to us- our houses, cars, art, even life- then why not our data that is now less on paper and more in e-format? Keeping in mind the ever-expanding cyber threat landscape, it can be said that cyber insurance will soon become a necessity, instead of an option.
Cyber insurance is however not a replacement for cyber security, for if there is no comprehensive security framework in place and users are proven to have been careless, insurance claims may not stand ground. We can look at it as an extension of the security framework that helps to compensate for losses due to data breach. It is this part of the proactive measures to keep data safe.