Insurance coverage for health, home and business is never a bad idea, but it’s no substitute for robust cloud-based data protection.
While cyber risk and data breach coverage might provide some financial compensation and reduction of liability in the wake of a disaster, it may not be enough to keep your business running. Insurance is nice to have, but cloud-based data protection is a must.
What a data loss insurance premium will pay for
Small and medium-sized business are not only particularly vulnerable to cyber attacks, but they are less likely to recover from threat actors holding their data hostage with ransomware or a disruption due to natural disaster. Cyber risk and data breach coverage is the natural evolution of insurance in a digital world where data is the lifeblood of any business regardless of size.
Whether it’s called cyber risk and data breach coverage or electronic data loss insurance, the goal is to safeguard the organization in the event it loses all its important business information. A typical offering covers lost or damaged electronic data, interruption of computer operations, and coverage for e-commerce transactions. For example, if a device holding sensitive data is hacked or Personally Identifiable Information (PII) is lost, the compensation from cyber risk and data breach coverage might pay the cost of any remedial actions, as well as systems repairs, legal costs and even some good public relations to repair the image of the business in the eyes of its customers.
Beyond financial remuneration, a cyber security and data breach insurance provider might offer additional consulting services to help their clients with risk and compliance management so they can proactively protect their business, as well as emergency services in event they suffer a disruption, including crisis management, media and publication relations, and customer notification services.
Like any other insurance, there’s a compelling case to be made for paying a small monthly premium in case disaster strikes. And certainly, smaller organizations underestimate their risk—they often assume it’s a “big business” problem, when in fact, it’s likely to face more dire consequences than a large organization.
But no matter the nature of the disaster and the coverage, there are some consequences insurance can’t fix, which is why spending money on better cloud-based data protection offers better return-on-investment than paying a monthly premium.
Cloud-based data protection pays for itself
Having cyber security and data breach insurance doesn’t change the fact that you’ve lost mission critical business information, nor does it mitigate against its severity. If the loss of data is so profound that you or your customer can no longer operate, the services and compensation the insurance payout provides may not be enough to maintain business operations.
Although insurance might cover legal costs and limit liability, it doesn’t eliminate it, nor does it change the regulator framework and privacy legislations with which you must comply, such as the Personal Information Protection and Electronic Documents Act (PIPEDA) or the General Data Protection Regulation (GDPR). Most of all, it doesn’t obviate the need for better data protection. Your insurance can’t bring back lost information, and if you can’t function without it, no amount of insurance can help.
As much as any insurance is supposed to give you peace of mind in the event of a worst-case scenario, cloud-based data protection is the insurance premium most worth paying. While it doesn’t eliminate the legal liabilities that may come with customer data being stolen, or your notification obligations under PIPEDA or GDPR, it means you can get back up and running with minimal to no interruption. Your reputation may take a small hit with your customers, but they’ll also find some reassurance in that you had planned for the worst.