Business interruptions are problematic for any business, and there are several events that could cause production to slow down. One threat that continues to plague businesses of all sizes is interruptions due to cyber events. There has been a worldwide shift toward more dependence on IT services to manage production, logistics, and finances. Any event that creates chaos in one of these processes can cause extreme company losses. Insurance providers are now tasked with addressing the demand of consumers to provide cyber risk coverage.
How Can Businesses Manage Cyber Liability?
Any failure of critical technology within a company causes losses that can be covered through cyber liability insurance. Companies that rely on cloud hosting for inventory tracking and ordering will encounter material shortages and production delays of the network that provided access to the cloud-based service. Cyber attacks can bring down a company network in a matter of seconds, leaving the company completely vulnerable to theft of private company and consumer information. These scenarios are just a few of the liabilities that need to be addressed by cyber liability insurance.
How Can Businesses Mitigate Interruption Risks?
Business interruptions can take on many forms when IT services are involved. Third-party attacks cause disruptions on several fronts, with malware and ransomware being two situations where operation-critical information is taken hostage. However, companies that contract out their IT services run the risk of experiencing a breach through a poorly managed security firewall or other errors that take place with the IT services provider. Large companies tend to have more resources to craft a strong IT department, leaving smaller companies with greater exposures to interruption potential.
Businesses of all sizes need to evaluate where the risks lie with their information security departments and processes. Those who provide managed IT services carry a greater risk than the average company handling their IT needs internally. While all industries share some risks, certain sectors rely more on IT services, such as the financial sector, retailers, or manufacturers of electronic devices or hardware. The automotive industry and pharmaceutical company depend on suppliers for their raw goods and materials, and disruptions within the supply chain (tracking, ordering, or accounting) can lead to business interruptions.
Rely on Careful Underwriting
In addition to determining where the interruption risks can come from, insurance coverage needs to be comprehensive. Cyber liability insurance carriers are partly responsible for ensuring direct losses are included in policy underwriting, but each company must pursue the necessary coverage content for its specific exposures. Inclusions may need to extend beyond first-party occurrences and address any IT-related incident that creates a business interruption.
The dependence on IT services will only increase as developments in software and devices improve efficiency and operations. Protecting against cyber risks and business interruptions is crucial for continued business success.
About Axis Insurance Services, LLC
At Axis Insurance Services, LLC, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn