A friend of mine asked me if he should buy cyber insurance for his business. Whether your need is for a self-hosted/owned, cloud or hybrid infrastructure this is not an easy answer. As I thought about it, I decided this is probably a topic of interest to many financial managers at small to mid-size enterprises. How should you decide this question and who can you seek for legitimate counsel that is qualified to answer this question without having a conflict of interest? I decided I am possibly one of the most qualified people, more so than the insurance broker, and I have no direct interest in the purchase. So here goes….
First some background, my friend owns and operates one of the more notable civil engineering firms in southern California. It is not a huge firm, but it does have about 50 highly skilled and compensated engineering professionals. The firm is well established and I am sure it has a good valuation to protect. I know some of their clients and they are big important entities. If something happen that causes a loss for his clients the ramifications can be really big. This all sets the stage for a serious consideration of additional insurance for cyber losses. Let me point out I am not a lawyer and none of this is intended to be legal advice. This is my analysis based upon my anecdotal experiences of hacks and losses at dozens of other firms over the years. It is also based upon my cyber insurance decision.
First some other disclosures. I decided to make sure that Alvaka Networks has cyber insurance coverage as well as professional liability insurance. The decision to add cyber insurance has been relatively recent in the past few years. Why? Because of the environments we work within, the clients we have, and the highly regulated spaces that many of my clients operate within. We have also recently raised our Professional liability coverage level, but that was mainly driven by the requirements of a large client and over the past few years our clients seem to be getting larger and larger.
So why should my friend buy this additional cyber insurance...?