A seasoned and successful entrepreneur, Mr. Sonit Jain started GajShield in 2002 and has been the driving force responsible for establishing GajShield as the leading and continuously emerging company, offering modular integrated security solutions. His passion to make Cyber Security accessible and interesting has led him to become a leading expert in the Cyber Security Space. Under his leadership, GajShield has accelerated growth, with a worldwide network across 10,000+ locations, wealth of awards and certifications, establishing the distinction of being the only Indian Brand, operating in the Indian firewall space since 2002.
It is not uncommon for business owners to believe that cyber insurance is not a necessity for them. This line of thinking could not be further off the truth. As per a recent study, businesses in the manufacturing sector saw a 300% increase in the number of cyber-attacks faced over the last year. Organizations in this sector have a lot to lose — manufacturing licence details, product plans, confidential marketing strategies, among others — if they do not incorporate the requisite cybersecurity infrastructure against data security threats. Cyber insurance, as the name implies, covers the losses caused by such attacks partially or totally for manufacturing-based businesses.
What cyber insurance brings to the manufacturing sector
Manufacturing-based organisations may not face conventional types of cyber-attacks faced by typical IT companies. Instead, such businesses face critical data breaches and data manipulation. Such types of threats have a debilitative effect on data records such as procurement details, employee information, supplier billing and shift payroll details. Manufacturers generally may have certain data security protocols to prevent such threats. However, the cost of premium data security threat response tools and applications will be high, directly affecting a manufacturer’s bottom line and expenses. To make things worse, if data security attacks are successfully carried out by cybercriminals despite all the preventive effort and investment, manufacturers will have to spend more on reputational damage, production downtime, litigation costs from suppliers and end customers and other costs. Cyber insurance helps manufacturers be at ease regarding such massive expenses and keep their mission-critical operations running continuously.
Insurance providers try to force the banning of cyber coverage under commercial general liability (CGL) in a courtroom. This helps beleaguered manufacturers as they generally rely on their respective CGL policies to provide coverage for cyber threats. Additionally, insurance providers also take into account the policies and amendments made by the respective insurance services office during litigations.
All in all, cyber insurance providers open avenues to cover the damage caused to manufacturing businesses because of data breaches or other types of cyber-attacks.
Cyber insurance is needed for the following liability coverage in case a cyber-attack hits a manufacturing company’s business architecture. Firstly, cyber insurance policies provide cover for first-party liabilities such as credit monitoring, identity theft, procurement data restoration, contact centre set up, direct ransomware attacks and similar others. Secondly, data security insurance provides cover for third-party liabilities such as lawsuits, regulatory investigations and electronic and social media liability. This is more vital than first-party liability coverage as manufacturers would have to bear such costs in case of a data security attack without this. Additionally, the reputational costs will have to be borne by businesses too. SME manufacturers will find that these coverage areas are more than sufficient to resolve several problems associated with cyber threats. And thirdly, Manufacturers may depend heavily on cloud service providers for computing power or virtual storage space for their production, procurement, packaging and delivery-related data. Generally, manufacturers may believe that their cloud-based databases and computing architecture are super-secure. Unfortunately, that is not true. Moreover, a manufacturer is still legally accountable to keep cloud-based data safe from leaking or manipulation. Apart from having impenetrable cyber security tools to safeguard the cloud-based data and operations, your cyber insurance provider will provide cover if a manufacturer’s third-party host suffers debilitative losses.
What details can be considered while purchasing insurance
Manufacturers will have to have a valid answer to the question “what and how much do I need to cover?” while selecting the insurance policy. They will need to know the percentage of liability that will be covered by insurance. This may also include the cost of responding to a data breach. To get retroactive insurance coverage, insurance companies may include specific policies that involve providing coverage for a data security attack that takes place after a certain date.
Certain types of policies leave this date the same as the date of policy inception. As a result, such policies wouldn’t cover the data security attacks that took place before certain dates or before the policy was purchased. So, manufacturers will have to be careful regarding the purchasing of cyber insurance policies. For insurance providers, this ensures that they can cover only known breaches for which claims were made after the purchase of the policy.
While purchasing cyber insurance policies, manufacturers have to ensure that they consider all the various aspects, such as CGL policies and the manufacturing operations and data they want covered by cyber insurance before making policy purchase decisions.
What kinds of attacks can be covered with cyber insurance
Firstly, cyber insurance helps cover social engineering attacks, which are caused due to employee negligence in manufacturing companies. Such types of data security attacks can lead to cybercriminals getting access to a manufacturer’s data and encrypting it to prevent future use. Cyber insurance can be helpful to minimise the impact of ransomware and phishing attacks. Secondly, insurance providers also provide coverage against forensic and investigative costs, system damage expenses, downtime opportunity loss costs, among others.