Cyber Insurance Vs Cyber Security: Why You Need Both

If your business is debating the need for cyber security versus cyber insurance, know that the answer is easy - you can not have one without the other. Cyber insurance and cyber security are both important tools for managing digital risks within businesses of all sizes, but they serve different purposes. Cyber security is all about preventing cyber attacks such as phishing scams, ransomware, malware, viruses, and hacking through preventative measures like strong passwords, firewalls, and employee training to name a few. Where cyber security is a preventative measure, cyber insurance comes into play after an attack occurs and helps cover the costs after the fact. Let’s take a closer look at these two key components of your business's digital health and why you should invest in both strategies.

What is Cyber Security?

According to America’s Cyber Defense Agency, cyber security is defined 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.” Since everything in our highly digitized world relies on computers, devices and the internet including communication, transportation, shopping, medicine and medical equipment, it is essential that proper steps be taken to protect data and the technology that contains said data. In short, cyber security is a proactive strategy to protect data and technology while stopping potential attacks from happening. Obviously attacks have increased over the years so this component of any business is critical to safeguarding client data and financial information that, if left vulnerable, could mean the demise of a business.

What is Cyber Insurance?

Cyber insurance, on the other hand, provides financial protection in the case that an attack occurs. The insurance would cover identifying the source of the attack using forensics, legal costs, ransom demands (in the case of ransomware), cost of lost business, cost to restore data, notification costs to clients and customers, and potentially credit monitoring for those impacted by a breach. To be clear, cyber insurance does nothing to safeguard data or technology. It is there just in case to help with financial recovery.

Why Your Business Needs Both

If your house suddenly caught fire, you would want to have devices that could help you stop the fire from spreading or at the very least alert you to the smoke and flames as they are happening. Think of cyber security as a form of protection similar to the safeguards that most homes and apartments have in case of fire. All homes have smoke detectors installed as well as fire extinguishers in the kitchen (and many homes even have them on all floors). Some homes or apartments have sprinkler systems and fire blankets to smother a fire and keep it contained. These strategies are very proactive in that they are around to prevent a worst case scenario from happening at your place of residence. However, should a fire break out you would want some form of insurance to help you replace or repair your home and possessions. That’s how cyber insurance would work in the case of a data breach or malware incident. Cyber insurance can provide financial protection after an attack has occurred. While cyber security and insurance play completely different roles in a cyber incident, they are both needed to prevent and recover from any form of malicious or accidental event that leaves your data vulnerable. Businesses should be implementing both strategies to not only protect the technology and data they have but to ensure that if an attack occurs there is a way forward in terms of financial recovery. For more information on cyber insurance please refer to our blog page or contact our team at Spectra Networks.