Cyberthreats grow in volume and sophistication by the minute, and the gloomy news is that there is little to stop them. Strong cybersecurity practices help immensely, but your business might still suffer a breach. When that happens, you need cybersecurity insurance in place as a way to transfer some of the risk of damage after an attack.
But insurance isn’t a replacement for security strategies. In fact, they work together to support each other and give your organization an even more robust approach to protection. Today, it’s vital for businesses to have both powerful security solutions and adequate cyber coverage if they fall victim to an attack. Here, we explain why both are crucial to have and how they integrate with each other.
One Shouldn’t Go Without the Other
While cybersecurity insurance may seem like a new business consideration, it’s been around for some time and has not enjoyed the widespread adoption it should have. In 2019, reports found that only 5% of manufacturing businesses had cyber liability insurance.
Adopting both security tools and insurance means you can at least displace some of the financial loss of a breach should your tools fail. Why put all the time, money, and effort into crafting and implementing a security strategy if you’ll just have to pay out for damages anyway after an attack? That’s where insurance comes in.
Your insurance should cover a variety of the following:
- Reputation loss: Loss of income because of damage to your brand
- Business income loss: Loss of income for a variety of reasons including additional costs to investigate the breach
- Incident response: Costs association with damage control
- Data loss: System restoration and data retrieval
- Disaster recovery: Costs associated with getting back online and smoothing out disruptions
Your security tools will have also helped mitigate the damage in a few of those categories. If you have disaster recovery technology in place, for example, your costs associated with getting back online will be far fewer than if you had no solution.
And that’s where the crux lies between cybersecurity practices and insurance. If your business has powerful tools and security policies in place, you’re more likely to get better premiums from an insurance provider. The less risk the provider sees, the less you’ll have to pay to insure your company.
Insurance providers—who have a mutual interest as you in mitigating threats to your business—may even incentivize you to lower your risk in a few ways. They’ll also take into consideration if you have met regulatory compliance requirements. Factors like how many third-party vendors you work with will also weigh into your premiums.
By taking precautions in your business to protect your data, you’re demonstrating to insurance companies that you are invested in lowering your risk level—a favorable look. Conducting risk assessments during insurance policy renewals can help you better understand how your organization looks through the eyes of an insurance provider.
In Tandem, They Reinforce Each Other
Adopting cybersecurity insurance can often lead organizations to reconsider their cybersecurity strategies and their security practices as a whole. When you are forced to consider how you handle security—as a result of being scrutinized during an underwriting process—you’re more likely to see the holes in your practices and take steps to remedy them. This results in both a stronger security approach and the insurance to back you up in case a breach occurs.
How Can You Make Security Policies and Insurance Work Together for You?
Point Alliance has cloud security experts on hand to help you have simpler conversations with your cybersecurity insurance agent. We have decades of experience helping organizations navigate the often-confusing waters of cybersecurity. Get in touch with Point Alliance today to learn more.
