In a global business environment the number one asset for an enterprise is its data. It’s data that enables the fine-tuning of products and research into new product development. It’s data that enables constant customer contact, client billing and delivery to clients. Yet, cyber-risk insurance that protects that data and the misuse of that data is still something of a new field. Here at RiskHeads we think it’s going to be one of the growth markets in insurance over the next decade and here are 5 reasons why:
1. Cyber-Crime is exposing Businesses to Bigger Levels of Liability than Ever Before
You may not have caught the story late last year when the US retailer Target lost millions of customer credit card details to a cyber-criminal. It’s left the retail giant facing liability potentially measured in billions of US dollars. In Target’s case it appears that while they could have prevented the problem – the warning signs were ignored from their automated systems. Not every cyber-criminal is likely to be as incompetent as Target’s attacker and not every business will be able to detect an incoming threat.
2. Denial of Service Attacks are Increasing
A denial of service attack is different from the usual forms of cyber-crime. The criminals flood the victim’s server with so much incoming data that it cannot operate normally. Why? Because this enables them to blackmail the victim into paying for “protection” or face a large scale loss of business. Just this year, the online freelancing portal Elance was knocked offline for the best part of a day thanks to a denial of service attack. Given the site turns over $1 billion+ dollars a year this would have caused a substantial amount of lost revenue.
3. Cyber-Crime is going to be a Growth Industry
There was a time when cyber-crime was a limited field. It required expensive equipment and a specialist education to consider getting into this area. Today, any computer sciences graduate can get involved. Countries like Russia and China which offer poor job prospects for such graduates are producing 10’s of thousands of skilled hackers each year.
4. Cyber-Crime is going to Affect Small Businesses More
The costs of developing online applications and sophisticated web presences were once prohibitive to small businesses. With those costs having plummeted across the last decade more and more small businesses are getting involved in data capture and storage. Traditionally small businesses haven’t availed themselves of cyber-risk insurance. This will have to change.
5. More and More Data Will be Captured – Increasing the Levels of Risk Exponentially
There is a lot of data online already and the amount of data captured increases every single minute of the day. Data capture never stops. As the pile of data grows, the opportunities for thieves, and even accidental loss or distribution continue to grow.