Is Cyber Security Insurance the Next Necessity?

  • Security

Companies are purchasing cyber security insurance
It is crucial for companies to ensure safe cyber security for its customers and employees. There are various measures companies can take in order to protect their customers, employees and businesses from fraudsters. Companies can safeguard their data with solutions including identity verification and more.

 

Safeguarding is important considering the Federal Trade Commission (FTC) has the power to regulate corporate cyber security. The FTC can also file lawsuits against companies regarding data breaches. Lawsuits can be an additional financial burden to a company on top of the costs of data breaches due to malicious or criminal attacks, which has increased from an average of $159 to $174 per record according to the Ponemon Institute.

Companies can be proactive in their protection by implementing identity verification solutions. As an example, Dynamic Knowledge-Based Authentication (KBA) assures that a customer is who they claim to be. KBA accomplishes this by asking multiple-choice questions that are unique to the customer. The answers to these questions can be more difficult to find than from a person’s wallet or social media accounts.

According to the Insurance Journal, some companies are taking extra precautions when it comes to potential cyber security attacks. These companies are doing this through purchasing cyber security and data privacy insurance coverage. In the Insurance Journal article, Wells Fargo discovered the popularity of cyber security insurance in its study of 100 middle market and large corporations. Wells Fargo found that “85 percent said they have purchased cyber security and data privacy insurance coverage to protect against financial loss, while nearly half (44 percent) have already filed an insurance claim as a result of a breach.”

Companies can never be too careful regarding the risks of data breaches. It is essential to have a well-rounded plan against fraudsters to ensure the safety of customers, employees and the business. Although, identity verification and insurance can require upfront costs, it helps protect a company’s reputation and finances for the future.