Sensitive data can be exposed to anyone. This happens all the time, and affects small and large businesses. Exposure can lead to loss of reputation, which can be very bad for a large corporation that relies on enjoying positive feedback from existing and prospective customers. When customers realize that a company has lost sensitive data, such as personal details and financial information, trusting such an organization would be a near impossibility. This is where data breach insurance will play a very important part. Although the insurance does not prevent loss of data, it ensures that proper measures will be put into place to protect the business.
Loss of sensitive data can lead to litigation by the customers whose data is lost. The data breach insurance will ensure that proper remedies are put in place within a short period to make sure that the company adheres to all applicable laws. The insurance cover also protects the company by making it possible to adhere to all the applicable regulations. Doing this is helpful and will result in avoidance of civil litigation. The company that takes the insurance will also not have to grapple with paying other stiffer penalties that could result from loss of sensitive data. The ability to comply with all laws and regulations related to loss of data is a plus in such situation.
Insurance also helps with peace of mind. The costs associated with data breach are huge. Meeting all the costs can drain the finances of a company, especially if it is a small business. Large corporations may be able to meet such costs, without draining its coffers. When data breach occurs, a company has to think of notifying the affected parties, going on a public relations blitz, and meeting legal as well as liability expenditures. This is a lot to ask of any company, irrespective of size, financial resources and personnel available to it. Taking insurance means that the company will find an effective method of reducing some of the burden it carries.
It is interesting that the benefits of data breach insurance have been highlighted numerous times, but many companies have opted to stay uninsured. However, the outlook in the industry is good, as more companies realize that they must buy insurance against loss of sensitive data, which could ground their operations. The insurance policies that companies have taken to protect against loss of sensitive data total $1.5 billion. The expectation is that there will be close to a 60 percent increase in the insurance policies in the next ten-year period. This will be fueled by the fact that organizations spend around $9 million to tackle data breach incidents regularly.
The conclusion is that companies need to focus on safety, rather than wait for the incidents to occur, and realize that they never bought insurance, and now have to suffer the consequences. Being safe is better than being sorry. Small and large companies must invest in this form of insurance, as more hackers enter the market each year, and businesses are exposed to more cyber attacks annually.