Insurance companies often take businesses through a holistic audit process before offering a cyber insurance policy. Here’s how to make sure your company passes with ease.
Cybersecurity Insurance: A No-Brainer that Requires Forethought
A whopping $3 million – that’s how much your company can lose if you suffer a data breach. And that’s just the tip of the iceberg: A data breach can mar your company’s image and scare customers away. Talk of a real nightmare!
The scariest part is that you never know when your company can come into the sights of scammers and hackers. These bad actors are increasingly refining their craft with all kinds of cunning phishing scams and malware attacks.
That’s why having cybersecurity insurance is a no-brainer. The difficulty, however, lies in whether your company has the right security setup to even get a worthwhile insurance package. In this post, we’ll show you what insurance companies look for and how to get your company ready. Let’s delve in.
1. Understand your cyber insurance options
The kind of coverage you get depends largely on the kind of business you run, its size, and your potential risks. In general, you’ll either get first-party or third-party (liability) insurance. Let’s break each of them down:
Also known as “data breach insurance,” first-party insurance covers direct costs that your business incurs as a result of a data breach.
- Notifying customers about the breach
- Paying for credit monitoring for affected clients
- Extortion payments
- Reputation management
- Loss of income as a result of shutdown
- Extra business costs that arise from the breach, including new hires and purchasing software/hardware
- Investigating and rectifying the breach
This kind of insurance is a must-have for businesses that collect confidential customer data, including personal identifiable information (PII), financial data and healthcare records.
Third-party insurance goes a step further than first-party insurance, covering claims that arise if a client sues you for a data breach. In some cases, clients can take class actions against companies, which can be costly in the long run.
Third-party insurance helps by covering the following:
- Attorney costs
- Media liability
- Settlement and judgment costs
- Regulatory fines
- Any other court expenses
In many cases, third-party insurance is bundled with professional liability (errors and omissions insurance). Although this kind of insurance is not standalone cyber insurance, it protects your business from civil suits that arise from common mistakes, omissions, and negligence.
2. Prepare Your Team for the Audit
Remember that no matter how many automations you’ve put in place to safeguard against cybersecurity breaches, it’s people who are going to man and review those systems. Hence, auditors often conduct staff interviews to get a sense of your risk. In fact, 60% of all breaches are caused by insider threats or human error.
Inform your entire team and relevant stakeholders about the forthcoming audit and ensure they prepare adequately. You should review all of your company’s policies and procedures with them.
Auditors typically need contact persons within your organization to help them get a sense of its security apparatus. Before the cybersecurity insurance audit, ask the auditors who they’ll need to talk to and the scope of the assessment.
Once you get wind of the personnel who’ll be key in your cybersecurity audit, set up a meeting and review all procedures and processes. This will give them a head start and ensure that all key players are on the same page during the audit.
3. Organize Your Cybersecurity Policy Documents
Asides from interviewing your team, an audit team would likely scour through your documents to get a grasp of your strategies and policies. To pass an audit, you’ll need to develop and organize such documents properly.
- Incident response plan (IRP): A step-by-step guide on what to do when specific types of breaches occur.
- Bring your own devices (BYOD) policy: Documents covering the kinds of devices employees can use at work.
- Password policies: How do you create passwords? Are there any guides to changing passwords?
- Access controls: who has access to which accounts? Are there any account restrictions? Are there authentication controls?
- Employee exit checklist: What are the processes to ensure employees who leave your company do not have access to your systems.
It’s a great idea to tie all these documents and more together into a single resource document. This will streamline and simplify information finding, making the audit process seamless.
4. Run a prior cybersecurity audit
You might be thinking that you’re too small or your business already has a good record with cybersecurity. However, thanks to increasing risk factors, cyber insurance rates are going up. For example, in the third quarter of 2021, cyber insurance rates were 96% higher compared to the same period the previous year.
As a result, insurance companies are requiring stricter standards for businesses “in the cloud” and even for small businesses.
Instead of waiting for an insurance company to run their own tests, why not run a test yourself? A SWOT analysis of your security systems will help you know what to work on before submitting your company for a risk assessment test.
In general, a cybersecurity test should cover the following:
- Systems security: This covers your entire business processes, including user accounts, privileged access.
- Physical security: This covers hardware.
- Data security: Encryption controls, data storage, and data transmission.
- Network security: Antivirus, firewalls, etc.
- Operational security: Security processes, protocols, controls, and policies.
True, you can run an internal cybersecurity test in-house, but it’s better to outsource to a team of professionals with cyber security expertise and a track record of getting the job done. Remember, your IT team can easily be blindsided by their own mistakes, and they’ll be tempted to give a good review of the policies and procedures they’ve put in place.
On the other hand, a professional company like iVenture, can give you an unbiased, rigorous, and professional account of your cybersecurity structure and also provide best-in-class solutions. Contact us to get started.