Protecting your business with Cyber Insurance

With digital technologies on the rise, more Australians than ever before are falling victim to cyber crime, and recently businesses have been in the cross-hairs.

 

From identity theft to credit card fraud, email scams, and computer viruses, the number of ways that criminals can access your personal information online has more than doubled in the past decade. In fact, a startling new report released by Veda, the leading provider of credit information and analysis in Australia and New Zealand, shows that one in four Australians claimed to be a victim of identity theft or fraud in 2015. This means that 3.8 million people inadvertently became pawns in the global fraud marketplace last year. But, Fiona Long, Veda’s Head of Cybercrime, says she fears that this is just the “tip of the iceberg,” with many more Australians living their lives like normal, completely unaware that their data has been stolen or compromised.

“The issue of identity fraud is not going to abate. The virtual economy has created a world of opportunity for cybercriminals,”

 

Is your business at risk of cyber crime?

 

With cyber crime growing in frequency, many businesses have discovered that their valuable data is at risk too. For example, the CFO of one of Australia’s largest insurance groups recently received a precarious email with an attached invoice for $50,000 from his CEO. The email contained the appropriate sender address, signature, privacy blurb, and even the language sounded just like the CEO in question. Everything seemed perfectly normal. Except for one thing. The CFO had never, in the seven years that he had been working at the insurance group, received an email with an attached invoice from his CEO. He jumped on the phone immediately and confirmed with his CEO that the email was a scam.

Unfortunately, not all cyber crimes end quite so easily. The Australian Government estimates that identity crime costs Australia around $2 billion a year with a further $350 million spent on preventing and responding to identity crime annually.

Imelda Newton, the General Manager of Veda, says that the damage caused by online scams and identity theft can sometimes be irreparable.

“The cost of brand damage to an institution that suffers a major data breach, or the cost of the embarrassment felt by a consumer if they are refused credit because their identity has been stolen, is immeasurable,”

Earlier in the year, the Government announced that it was prepared to strike back at cyber criminals, with $230 million of funds to be spent on a new cyber security strategy, including 100 new cyber specialists to combat “foreign adversaries”.

But what about cyber crime insurance? Can you protect your business from financial losses incurred by hackers, criminals, and online offenders?

 

Cyber crime insurance grows in demand

As with every other technology sector, cyber crime insurance is an emerging field. Many insurance companies offer some form of protection against cyber attacks, but the solutions are not all-encompassing.

For example, at Allsafe Insurance, one of our clients recently came to us with a dilemma involving an email scam and an unlawful bank transfer. A supplier received an email from our client advising them that they now had a new bank account and enclosed were the details. Not thinking anything of it, the supplier promptly updated our client’s bank account details and paid an outstanding debt of $10k into the new account. Once again, the email looked legitimate; the sender email address was correct, and there was a familiar signature and privacy blurb at the bottom. However, about a week later, our client contacted the supplier chasing the $10k debt and was told it had already been paid. The supplier told the client that they had paid the funds into their new account. But, of course, our client had not changed their bank account details in some 15 years!

As cyber security has been thrust into the spotlight, cases like this have prompted businesses and insurance companies to start a conversation about what needs to be done to safeguard against cyber crime. According to Chris Mackinnon, the General Representative of Lloyd’s Australia, the truly difficult risks of today are those which are rapidly evolving in the cyber crime space. “The unquantifiable threats surrounding cyber represent one of the biggest challenges the industry has ever faced,” he says. “The perils are evolving more rapidly than the products. Liability wordings become exposed to risks that didn’t exist at the time of writing, so how do you price that risk?”

 

Stay alert and educate yourself

 

Okay, so if you can’t gain access to cyber crime insurance or there are no existing policies that fit your unique situation just yet, what is the best thing to do? For now, we recommend educating yourself about cyber security and training your staff to be vigilant. In a lot of the cases we have seen, it has been because of dedicated and observant staff that cyber attacks have not escalated into something much worse.

You can read more about cyber crime at the Australian Cybercrime Online Reporting Network (ACORN). And, rest assured that the insurance industry is working on new solutions!

 

Picture of Ben Love

When not looking at ways to use technology to create a competitive advantage for his clients and build better businesses, Ben is a husband, busy father of boys, avid gardener, and keen runner and cyclist.

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