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Sony Data Breach a Game Changer?

February 5, 2015

A just released cyber claims study has produced some eye popping data for all businesses to consider in this the “Year  of The Cyber Breach”. The NetDiligence Cyber Claims Study for 2014 reveals that Hackers were the most frequent cause of cyber loses with Staff mistakes a distant second. Malware/virus introduction into a company’s server and Rogue employees also significantly contributed to  cyber claims. The study was a survey of leading cyber insurers word-wide. In this year’s study, PII (personably identifiable information) was most often sought by cyber intruders. PHI (personal health information) was the next likely record to be stolen and PCI (payment card information) was a close third. The study examined the real costs of cyber breaches to businesses and to insurance companies. Hold onto your wallet! According to the Study, the average claim payout was $733, 109. The average claim payout in the Healthcare sector was $1.3million. For a large company, the average claim payout was $2.9million. The average legal costs for companies and their insurers was $698,797. Crisis services costs (forensics, notification, misc.) on average were $366,484. The Study found that smaller organizations experienced the most incidents and the authors theorized that this occurred because smaller organizations are less aware of their exposure and commit fewer resources to risk assessment and data security and assessment.
 
What is the take away from this study? ALL businesses are targets for cyber-crime not matter what their revenues. When it comes to a breach, it is not a question of “if” is a question of “when”.  If your systems hold data which hackers want you are vulnerable to attack and significant loses if you don’t put the right protections in place and have a plan to deal with a breach when it occurs. Consider hiring a cyber-forensics firm to conduct a cyber-risk assessment of your systems. Ask yourself where, when and for what length of time is sensitive data stored?  Storing data in one system can increase the damage from a single breach. Consider encryption of sensitive information. Implement a security awareness program in your business to guard against rogue employees and outsiders who may have access to terminals and passwords. Finally, consider cyber insurance coverage.  Cyber insurance policies provide coverage for a variety of loses arising from a breach including, legal, forensics, business interruption, notification and reputational harm. 
 
To connect with Ted Schaer, shareholder and Co-Chair of Zarwin Baum’s Property and Casualty Defense Department, please email him at tmschaer@zarwin.com or call 267.765.9606.

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