The Role of Cyber Insurance in Managing Cybersecurity Risks for Businesses

Running a healthcare business is not what it used to be. Gone are the written notes that the receptionist filed in the filing cabinet. Gone, too, are the computer-based notes, stored on the computer’s hard drive, or even a floppy disk. Today, all the patients’ records (personal data, medical history, diagnoses and treatments) are stored in cyber space.

A radiology practice, like, is one such business. Not only is confidential information about their patients ‘out there’ in the cloud, but communication between them and other medical professionals is also in cyber space. All of this is waiting for potential criminals to hack into and use illegally.

The answer to this is to put cyber security measures in place, and to take out cyber insurance.


What are the risks of doing business in cyberspace?

Many businesses that operate cyber space handle huge amounts of data, including confidential (often personal) information. Some of these businesses are in the healthcare industry. Radiology practices, for example, handle huge volumes of information about their patients that is both personal and confidential.

If this is accessed illegally, there is a huge risk that the criminals will have information they can use for phishing scams or to extort money from individuals. The criminals can also assume your identity and make huge purchases on your credit card, or open accounts, for which you will pay.

These are the risks that any business, especially those in the healthcare field, that handle masses of sensitive and/or confidential data, can face. This is also why these businesses must put cybersecurity measures in place.


What is cyber security?

America’s Cyber Defense Agency defines cybersecurity as: “…the art of protecting networks, devices, and data from unauthorized access or criminal use and the practice of ensuring confidentiality, integrity, and availability of information.”

Simply put, this means cybersecurity is everything that is in place to keep anything to do with computer systems safe, especially when there are large amounts of electronic data involved. One of the most important things that cybersecurity guards against is the theft or illegal access to information, including personal data and details about private individuals.

It is essential for any business that works in cyberspace in any capacity to have some form of cyber security. How would you feel if your information was stolen from your local radiology practice, or other healthcare organization? And how will the business manage to meet the costs associated with such theft?

One of the answers is to have cyber insurance.


What is cyber insurance?

Cyber insurance works on the same principles as does all insurance: you pay a certain fee, gambling that you have insurance if you need to claim it; the insurer guarantees to pay insurance where necessary, but gambles that you’ll never need it. The difference is that cyber security insurance is specifically aimed at a business reducing the risks of trading online.

So, the company buys a policy that gives them the guarantee that the insurer will help cover any expenses incurred if their cyber security is breached.


Why would a business need cyber insurance?

No business working in cyber space anticipates suffering a cyber-attack. These things can happen at any time, though. It’s a wise business that does what they can to minimize the risks they may face if it happens to them. This is where cyber insurance comes in.

Cyber insurance offers companies some protection in the event of a cyber-attack. The coverage offered by a policy can help a business sort out the issues and expenses they may face after a cyber incident.

Let’s suppose a radiology business is hacked and the patients’ data stolen, then they will face losses and potentially huge costs. If they have cyber insurance, the insurance company will help the business cover some of the costs of the loss.

Cyber insurance policies

The problem with the cyber world is that things are constantly changing, so the risks of operating in cyberspace also fluctuate constantly. This makes cyber security insurance policies different from more conventional insurance policies. The insurance companies don’t have huge amounts of consistent or even historical data to draw on when they develop what their policies can cover for what rate and at what premium. They constantly need to adapt what they can offer customers that will ensure they will be covered in the event of a cyber incident.

The policies generally cover the losses that affect the business itself after a cyber event, as well as any other people or businesses that suffer losses after a cyber event. These losses would depend on how these parties relate to the business.


The bottom line

The bottom line for businesses that handle confidential data, like a radiology business, is to guard against a cyber-attack. Putting cyber security measures in place is the first step. Taking out cyber insurance is vital, too, to help manage cyber security risks for that business.