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Risk Insider: Allen Melton
Are You Properly Evaluating Cyber Exposure and Recovery?
Allen Melton is a partner and the Americas Leader for EY’s Insurance & Federal Claims Services practice. He has spent the majority of his career assisting clients to achieve financial recovery from disasters through commercial insurance claims, FEMA’s Public Assistance program, HUD CDBG-DR grants and other sources of funding. Over the past 20+ years, Allen has assisted clients in the attainment and resolution of over $10 billion in insured claims and federal disaster grants resulting from various loss events around the globe. He also regularly provides industry thought leadership through presentations at the various industry events. He can be reached at [email protected].
In a lunch discussion with the director of finance at a large health care corporation, we discussed the recent data breaches where Russian gangs had stolen in excess of a billion logins/passwords.
Her concerns, or lack thereof, focused on the fact that her organization did not maintain credit card information since they were a patient research facility, and payments came from the large drug companies, not individuals.
In reality, their chief research facility maintained records on thousands of patients every week. This information included name, birth date, Social Security, health information, etc.
“Cyber” is Misleading
All too often when people hear the term cyber crime, thoughts spring to mind of some clandestine techno geeks trying to hack into banking information and wire funds into overseas accounts. However, the information subject of a cyber attack does not have to be located on a network. Data can reside on an old discarded hard drive, a smart phone, iPad or a printed report unconcernedly dropped in the trash.
What Data Does Your Company Have That “They” Want?
While credit card information is probably the most sought after form of data, aggressive spammers, such as the recent headlining Russian gang, are often happy to just get a new email address and the account’s contact list in order to push their enlargement pills.
Some cyber criminals are looking for browser history or any personal information on employees, clients, etc., that can be sold to disreputable advertisers. Some data thieves are looking for your draft invoices, so they can swap out your banking information for theirs to defraud your customers. Other data thieves will try to take over your network and ransom it back to you.
What Can You Recover From Insurance?
You really need to look everywhere in your program for recovery. The inconsistencies between cyber policies make this a very inexact science.
Some CGL, first party property or crime/fidelity policies have limits but can represent the only methods of recovery. Policyholders may also have potential recovery through D&O, E&O, and professional liability coverage, depending on the nature of the perpetrator and what actually occurred.
While these policies often contain relatively insufficient coverage limits, each may contain potential recovery sources that need to be thoroughly vetted.
In recent years, newer policies have evolved to address the unique risks of cyber crime. Policyholders can potentially look to cyber risk policies for coverage of damaged equipment, stolen equipment, business interruption and extra expenses, costs of notifying impacted parties, reputational damage, remediation costs, third party claims, and cyber extortion.
Take Action Now
Cyber risk is a reality for practically every organization and the sophistication of those trying to access your sensitive data grows daily. It is important to understand the breadth of this risk as it extends well beyond simply a remote hacker gaining access to your network.
Evaluate the insurance policies you have in place to understand what coverage may be responsive to a cyber attack or breach and where necessary, take the appropriate steps now to fill those gaps in coverage.
Read all of Allen Melton’s Risk Insider contributions.
