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Cyber Risk

Cyber

What is Cyber Risk?

Cyber Risk is first and third-party risk associated with e-business, the Internet, networks and informational assets.

Who is at risk?

  • Business Owners who operate a website.
  • Business Owners who are concerned with their clients’ and employee’s information being compromised.
  • Business Owners who are concerned about copyright/trademark infringement.
  • Business Owners who are aware of the risks associated with computer hackers, viruses and other damaging computer programs.
  • Business Owners who understand the importance of upholding and preserving their professional reputation should an incident occur.
  • Business Owners who keep electronic records of clients names, addresses, phone numbers, social security numbers, credit card numbers and other sensitive information.
  • Business Owners who accept credit card payments.
  • Business Owners who may have employees that could compromise sensitive customer information or do something illegal to make some money.
  • Business Owners who use laptops, Blackberries or other portable devices that store client information.

What does a Cyber Security / Privacy Policy Cover?

Third Party Liability

  • Disclosure Injury - Including lawsuits alleging unauthorized access to or dissemination of the plaintiff’s private information. (Can be extended to outsourced data processing and data storage services.)
  • Content Injury – Including suits arising from intellectual property infringement, trademark infringement, and copyright infringement.
  • Reputational Injury – Including suits alleging disparagement of products or services, libel, slander, defamation, and invasion of privacy.
  • Conduit Injury – Including suits arising from system security failures that result in harm to third-party systems.
  • Impaired-Access Injury – Including suits, civil fines and penalties arising from system security failure resulting in your customer’s systems being unavailable to its customers.

First Party Cyber Crime Expenses

  • Privacy Notification Expenses – Including printing, drafting, postage, call center costs and advertisements, cost of credit-monitoring services, credit freezes and fraud alerts for affected customers (even when state law doesn’t require notification). Estimated at $30 per person.
  • Forensic Costs – Costs to determining how the breach occurred.
  • Crisis Management and Reward Expenses – Including the cost of public relations consultants to maintain the reputation of the business.
  • E-Business Interruption – Including first-dollar extra expense.
  • E-Theft and E-Communication Loss – Extended to networks outside of your company’s system.
  • E-Threat or Cyber Extortion - Including the cost of a professional negotiator and ransom payment to stop cyber attacks caused by malicious hackers.
  • E-Vandalism Expenses – Even when the vandalism is caused by an employee.

Examples:

A manufacturer hosted a site banner for a key vendor. The manufacturer was unaware that the vendor's slogan was similar to a slogan of a company based in France. The manufacturer was dragged into an international trademark infringement lawsuit. Claim Value: $700,000

A chain of luxury hotels was expanding it's operations worldwide. They needed to upgrade their billing system to accomodate various currencies and tax rates. The chosen vendor upgrading the existing system, meeting all time requirements and milestones. However, during the final phase of installation, one of the installers accidentally erased $ 1.8 million of crucial data. As a result the customer sued the software installation company for the losses they incured. Claim Value: $1.8 Million

During a national trade convention, the CFO of a prominent company read from a media kit about its products and those of competitors, including defamatory comments about the executive officers of a competitor. The competitor sued for libel and slander for $1.5 Million

A bookseller created a Web site to promote itself. The Web site included passages from books. The publisher and author of one of the books quoted on the Web site sued the bookseller, alleging copyright infrinement and theft of intellectual property. The case settled for approximately $60,000. The bookseller incurred defense costss close to $35,000.

A software development company was sued by one of its best customers after using the company's cost-estimating program. The custommer claimed that a defect in the software caused them to underbid several projects. After a lengthy investigation, the software was found free of any defect, and it was user error that caused them to underbid. The customer dropped the case after considerable legal expenses were incurred by the software developer.

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