The Cost of Cyber Attack: Why Cyber Insurance is Essential in India?
Cyber security insurance or cyber liability insurance is a contract between the insurer and the insured. An entity can subscribe to a cyber policy in order to reduce the financial risk it may face due to a breach of data. Further, an organisation may comprehend the cost of cyber attack on the basis of the valuable data and information it possesses.Read more
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Cost of Cyber Attack
Cyber insurance is an emerging industry. An industry that subscribes to such insurance can be regarded as the early adopter. It is fluctuating and dynamic in nature. In the past few years, several companies endeavoured through cyber threats. The threats compromised the companies' data. This made them appreciate the importance of insurance policies and the cost of cyber attack.
Let us discuss the cost of cyber attack in detail.
Several people are associated with a company. For example, an organisation that provides services to customers at large is expected to store the data of millions of users. In addition, the company owns a social and legal duty to keep such information of users safe.
A third party may sue the company based on a breach of data by hackers or the company per se. Therefore, the organisation is required to pay special heed to such concerns. Further, it must protect the data of users to lower the risk and evade lawsuits by a third party.
There have been several cases recorded in the history of data breaches. Such incidents made the companies understand the cost of cyber attack.
Let us see such incidents in the following case study.
The NASA Cyber Attack Case
A 15-year-old boy name James Jonathan successfully hacked the computers of NASA for more than 20 days. He shut down their devices, which resulted in downloads of around 1.7 million software. It cost the space giant $41,000 in order to repair the devices. The incident took place in 1999 and NASA understands the importance of cyber security policy.
Sony PlayStation Network Case
The online video games of Sony faced a massive breach in security. The cyber theft breached the data. It successfully stole the name, address, and credit card details of 77 million users. The users were expected to provide their details in order to enjoy the PlayStation games.
Upon the incident, Sony realised the theft of user data which compelled the company to shut down the PlayStation network. In addition, the company divulged the breach of data late to the public.
Further, the users were not allowed to browse or download Sony's games. Due to shut down of the network, the user could not play the games over the internet. The breach caused the goodwill of the company in the market to decrease. Several users shifted to other online games. In addition, the cyber attack lasted for 23 days which caused a loss of $171 million to the company.
The loss incurred by Sony in the cyber attacks could have been recovered if it had subscribed to a cyber insurance policy. Unfortunately, the company never subscribed to such a policy. However, the company instituted a lawsuit with regard to other insurance it had. Nevertheless, the court rejected the plea on the ground that the insurance policy was only subject to physical property damage. Hence, the company incurred a heavy loss in cyber damages.
The Adobe cyber attack and Yahoo cyber attack cases are two of the most famous incidents in history. Adobe lost the credit card details of 2.9 million users. At the same time, 500 million accounts were compromised when the cyber attacks on Yahoo. In 2015, Ukraine's power grid also faces a cyber attack. It resulted in the power loss of several homes for a few hours. Therefore, companies must subscribe to cyber insurance in order to protect the data of the users and companies.