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Through the use of social media, cloud computing, email and databases, information can be transferred with a click of a button, and viewed by any number of people around the world in a matter of minutes. This is undoubtedly a quick and relatively cheap method of communicating with customers and marketing your company, until it goes wrong.

Cases of virus attacks, infringement of copyright, defamation or theft of customer and employee data have risen in the last few years, and these types of case continue to appear in the news on a regular basis, especially when the data breach is from a company we all know and trust such as Sony.

Sony Online Entertainment and the Playstation Network

In April 2011 hackers stole the personal details of around 77 million users of the Playstation Network, and an additional 25 million from the users of Sony Online Entertainment. This included data such as names, addresses, email addresses, phone numbers, and debit/credit card information. The cost of the investigation, cleanup, insurance and updates was estimated to be around £105 million – not including lawsuits.

However, it is not just huge international companies that experience expensive breaches. The number of attacks on small businesses (fewer than 100 employees) rose from 141 in 2009, to 761 in 2010.

In fact, it is difficult to find any business that isn’t at risk of becoming a target, due to them owning at least one of the following:

  • A computer network
  • Option of credit card transactions
  • A database of personal information

And it is not just the risk of being hacked by a virus or a cyber criminal that can cause problems. More and more of us are accessing emails and databases on the move through laptops and smartphones, which can be easily lost meaning sensitive information could be accessed by a member of the public. And even if the data is not abused, the fact the information was lost in the first place counts as a security breach, with a potentially large cost.

Facts and Figures

  • The average cost of a data breach in the UK is £1.75 million (2011)
  • 31% of data breaches are due to malicious or criminal attacks
  • Negligent employees or contactors caused 36% of breachesThe number of attacks on small businesses (fewer than 100 employees) rose from 141 in 2009, to 761 in 2010

Although it isn’t always possible to totally stop these breaches from occurring, it is possible to protect your business from the problems a breach may cause. Cyber Liability Insurance, also referred to as Internet Liability Insurance or Online Liability Insurance, protects against claims arising from:

  • Security breaches
  • Misuse of company email
  • Libellous content on the company website
  • System damage caused by viruses or malware
  • Financial loss caused by internet downtime, or failure of the company website

This provides specialist protection which is often not included in general liability policies, whilst minimising business interruption after a claim and protecting your business financially from costs such as cleanup, security updates and expensive lawsuits.