Data breaches are like lightning: one never knows when or where they'll strike—or how much damage they will cause. Given their unpredictable nature, data breaches are difficult to budget for. Cyber insurance can help offset these unexpected costs, but keep in mind that it is not a substitute for implementing good data privacy and security practices. In addition, cyber insurance does not cover all expenses, such as diminished reputation or customer churn.
Read related: “Willis: Boards Must Be More Aware of Cyber Liability.”
Cyber insurance policies are different from most other types of insurance as they are focused on mitigating down-the-road legal liabilities that may arise from a breach event. For this reason, cyber policies can be prescriptive in their response to a data breach. It's important to involve relevant managers from across the organization early in the decision-making process to make sure their departmental requirements are known and policy options are understood. As experts in data breach best practices, we recommend that companies looking at cyber insurance consider the following steps:
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