Like any other business a firm may store use transfer and manage

Like any other business, a firm may store, use, transfer and manage large electronic data. The data may include the customers’ information, tax records, sales report, administration information, vendors’ information, employees’ records, information, and other information. In one way or another, the data stored can be damaged, stolen, compromised or lost. The systems can burn up, crush, be stolen or be damaged losing all the information stored in. The cost of restoring the information lost can be quite a large budget. The firm, however, may also be accountable for the third parties damages in case the information was stolen (Malhotra, Y. 2017) Moreover, the organization may be required to notify the affected individuals by the breach, which will need the company to foot the notification bills. Cyber risk insurance is a policy plan that is set to help an organization or an insured institution to cover some or the whole budget of data recovery and data breach.Cyber risk insurance is also known as cyber liability insurance covers several risks. The risks are determined by the nature of loss or occurrence. The cause of loss can be fraud, theft, damage from natural disaster or accidents. In case of theft or fraud, the company may be required to foot the liability cost, which is the cost, incurred by third parties or the company’s clients because of data breach or cyber-attack. The company, however, must also spend on system restoration and data recovery and notification expenses where the firm notifies all the affected party on the data breach. The company may find itself in a class action lawsuit, and exceptional regulatory charges may be incurred. The damaged system maybe from accidents, fire, floods or any other cause, the company may suffer the cost system restoration and data recovery (Eling, M. and Schnell, W. 2016, 17)Quantifying and assessing the risk exposer in terms of money is always a challenge to many organizations due to the dynamic nature of the technology. However, when evaluating the risks, it sometimes possible to measure and quantify the organization’s risks in economic terms. The quantification helps the company to manage the risks and helps in better decision making. There is cyber exposure quantification where the insurer can analyze the impact of an incident or a breach on the insured organization using cyber scenarios that are technically sound. These scenarios are examined to give out estimated losses results using the cost models. The company through the events scenario can estimate the data breach impact (Cherdantseva, Y., Burnap, P., Blyth, A., Eden, P., Jones, K., Soulsby, H. and Stoddart, K. 2016, 22). A scenario is investigated; the consequences of the breach are quantified in economic terms. For example, if the breach would affect third parties and customer’s information, the notification charges are estimated according to the number of the affected individuals. However, the company can also quantify the risk in terms of losses made in dollars. An analysis of an event scenario is carried out to find out an estimated amount that a business can suffer due to a data breach or cyber-attack. All the claims that might be raised are quantified in monetary value. Moreover, the company can quantify the risk in terms of business interruption. A data breach, cyber-attack or system compromise can interrupt a business or cripple the business technologically. A company can quantify the risk by estimating the total loss the company will suffer due to business interruption (Pal, S. and Mukhopadhyay, A. 2018)Cyber risk insurance is as essential as any other policy. You can imagine running into an accident, hurt yourself and another party and you don’t have insurance. It would be too expensive for you and burdensome that you would opt being jailed. The same happens in the event of cyber-attack or data breach. Most the small business owners don’ believe there is a need to take a risk insurance policy. They tend to think that hackers and internet villains are only interested in big sharks where they would scoop large sums. But according to recent findings, Kshetri, N. (2018, 9) study show that SMEs suffer cyber-attacks frequently than large companies. This is because; hackers have found that SMEs are easy to break through. Therefore, SMEs cannot just assume that only large companies should be concerned with cyber risk insurance.Modern organizations need this insurance policy. In the world today, technology is taking over. Every company is storing its information in an electronic method. Many businesses prefer recording their daily activities and data on computers. The data stored can easily be compromised, stolen or be breached. The consequences of a cyber-crime can be too expensive for a company to bear. The company might be forced to use all its wealth on compensation and liabilities thereby crippling the company. With the loss of critical information might push a company into a legal situation, which requires funds. With the help of this insurance policy, the company will not have a heavy burden to carry. The compensation from the insurance will help the business solve and face the impacts (Radanliev, P., De Roure, D., Cannady, S., Montalvo, R.M., Nicolescu, R. and Huth, M. 2018, 15)Stories have been said and written about the impacts of data breach and cyber-attack on multi-national companies, government organizations and charity organization with huge donations, buying and selling sites. Some sunk never to rise again. Others were crippled financially due to liability and restorations cost, making it hard for them to recover. The importance of this insurance policy is clearly stated though many businesses don’t seem to understand (Tosh, D., Shetty, S., Sengupta, S., Kesan, J. and Kamhoua, C. 2017, 22)The most significant benefit of insuring a cyber risk is the compensation or the cost covering that is done by the insurer in case of an incident. Many companies believe they are safe from malicious action and hacking. However, a significant number of companies have suffered a data breach or loss due to the reckless operation of employees. Mistakes do happen, and no one can predict that an error will not or will happen. Dealing with a cyber-attack scenario or impact can be very expensive, but the cyber risk insurance is designed to cover the cost related to the breach.However, there are several challenges of insuring a cyber risk. Insurers have trouble in defining cyber-attacks. Because of the dynamic nature of technology, the insurers lack a clear definition of how threats can influence the insurer. This makes it hard for the insurer to do an explicit estimation or quantification of the impact or the risk. Moreover, many businesses are in a dilemma of whether they should spend on policy or prevention of data breaching. Many companies prefer investing in better firewalls, upgrading system security and cyber protection rather than purchasing the insurance policy. The fact that many companies do not fully understand the cyber risk confronting them; they do not seek insurance help or mind to find out the available policies (Radanliev, P., De Roure, D.C., Maple, C., Nurse, J.R., Nicolescu, R. and Ani, U. 2019, 13)

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