Posted By: ITWiser Webmaster - Yorkshire's IT Specialists
Posted By: IT Wiser
Hacker Insurance: Will It Have Any Effect on Cyber Security?
The Government has decided that now is a good time to begin working with insurance companies to develop a new kind of cover aimed squarely at companies that might eventually become targets of cybercrime. The question is will hacker insurance have any measurable effect on cyber security outcomes? Government officials hope so.
According to a number of news reports, the Government engaged in talks with 12 insurance companies earlier this month. It hopes to encourage insurers to develop this market with the understanding that they can introduce new security protocols and procedures as prerequisites for providing cover. The Government believes the insurance industry is more capable of managing risk through insurance than it is through regulation.
On the face of it, the principle appears to be sound. Any company that wants to protect itself against financial damage caused by hackers might consider an insurance product that afforded them the protection at a reasonable price. By the same token, insurance companies are not likely to risk heavy losses by insuring companies with lousy security procedures. Offering cover would enable them to put certain standards in place that each of their clients would have to meet.
Any speculation regarding the idea is found in the very real question of whether companies would pay for hacker insurance or not. And if they would, how much would they be willing to pay before they realise diminishing returns? These are questions that will be have to be addressed by insurance companies before they even consider writing policies.
Insurance No Substitute
Hacker insurance may be a good idea in terms of protecting the financial assets of companies that might be targeted for cyber-attack. However, it is certainly no substitute for sound web security and routine data backups. Especially when we are talking about the cloud. Hacker insurance would only cover a customer for financial losses attributed to cyber-attacks. It would do nothing to help a company's damaged reputation.
A better way to go for most companies would be to invest available resources in improvements for cloud security and data backup. If there's money left over after those needs have been met, then it may be appropriate to consider hacker insurance. By no means should a company take away from its security and backup budget to purchase insurance – especially in a market that is so new as to not have any established standards.
As for whether or not companies would be encouraged to improve cyber security as a means of obtaining insurance, no one knows for sure. Nevertheless, scepticism abounds. We already know that setting certain parameters for car insurance does not necessarily make for better drivers behind the wheel. Is there a reason to believe that hacker insurance would motivate technology companies to be more secure?
Those of us at ITWiser recognise the need for more diligence in the area of cloud security. That is why we continually develop the products and services that have established our company as security and backup specialists. We believe every company utilising network communications and cloud computing owes it to their customers to be diligent about security. If insurance can be part of that equation, that's fine. If not, it may be nothing more than a financial distraction.
For more information about the products and services we provide, do not hesitate to contact ITWiser at any time. We would be more than happy to discuss how our solutions can meet your needs.