A guest blog from our intern….
At the beginning of the summer, I received a friendly letter from the Federal Government stating that my personal information may have been stolen in a recent data breach. Last year, I received a notification that my debit card information was compromised from a hack that occurred at Home Depot. Unfortunately, for most people, these are not uncommon events.
Any organization that uses technology to conduct business is exposed to cyber risk. This includes practices which collect credit card information, obtain customers’ personal information, and store health information. Organizations stretching from Fortune 500 companies to small businesses, in the public or private sector, require the preparation for any type of data breach in the form of cyber liability insurance.
According to the Travelers 2014 Business Risk Index Report, cyber threats are one of the top five concerns of business owners. Since 2013, data breaches have increased by 62% and the number of targeted attacks has increased by 91%. Criminal attacks account for 44% of breaches, 31% are due to human error and 25% are from system glitches. The consequences can be costly. The average total cost of a data breach to a business is $5.85 million. This includes an average of $201 per record lost, $258,000 in legal settlement costs, $574,000 in legal defense costs, and $1,600,000 in post-breach costs.
Many people often think big organizations are the only targets for cyber-attacks; however, this is not true. In 2013, 1 in 5 small businesses with 250 employees or less were targeted. When determining cyber risk and coverage, businesses must assess how they deal with data, what type of data they deal with, and if they are mandated to protect it. Like any other insurance coverage, no matter how big or small your risk may be, it is important to be prepared.