R&R Insurance Blog

A recent survey indicates that a significant percentage of companies were affected by supply chain disruption over the last 12 months. In the survey sponsored by Zurich Financial Services Group and conducted by the Business Continuity Institute (BCI), 85% of companies say they experienced at least one supply chain disruption.

Adverse weather was cited as the main cause of disruption by 51% of respondents. Weather was also a prominent cause of disruption in a similar survey last year. Some of the other findings from the article are listed below.

• The earthquakes and tsunami experienced in Japan and New Zealand this year, affected 20 percent of responding organizations, which were headquartered in 18 different countries.
• Cyber attacks became a top three source of disruption in the financial services sector.
• Supply chain incidents led to a loss of productivity for almost half of businesses along with increased cost of working— 38% of respondents—and loss of revenue—32% of respondents.
• Longer term consequences of disruption in the supply chain included shareholder concern, 19% of respondents, damage to reputation—17%—and expected increases in regulatory scrutiny—11%.
• For 17% of respondents the financial costs of the largest single incident totaled a million or more Euros. This figure almost doubles to 32% where less resilient supply chains are evident in the research.
• Loss of talent or skills rose from 14th place in 2010 survey to 6th place in 2011. This represents a warning that lay-offs among supply chain partners is leading to increased disruption, the report says.
• Seventy-four percent of respondents either strongly agreed or somewhat agreed with the proposition that outsourcing and just-in-time/lean strategies were making their organizations more vulnerable to supply chain disruption.

If you have questions on how to evaluate your business income exposure including evaluation of dependent properties, interdependencies between locations, and how to develop an adequate limit, please contact Scott Brookes. I have taught courses in business income including how to evaluate your exposures, develop a limit, and possible risk management solutions to minimize the exposure.

Businesses today rely heavily on the use of computers to manage their internal operations. Placing customer orders, inventory control, accounts payable to name a few. In addition, online banking has become an easy and efficient method of bookkeeping. Unfortunately, it could potentially make a thief's job easier too; that's why computer crime coverage is essential for businesses today. This coverage is designed to protect you from the loss of money, securities and other property fraudently transferred by computer from your premises (or the bank's premises) to somewhere else (most likely the thief's foreign bank account ).

Computer crime coverage, combined with fraudulent funds transfer, also protects you from loss of funds resulting from a fraudulent instruction given to a financial institution to transfer, pay, or deliver funds by phone, fax, or some other means other than computer. Thefts such as these are happening more frequently, and can deplete the bank accounts of their victims in a matter of seconds.

Speak to your Knowledge Broker about these coverages and how they may be important to your business.

Yesterday's announcement of UWM's data breach of 75,000 student and employee records is just another example of the exposure that all organizations have when it comes to their computer networks and the data that they are responsible for protecting.

How is your organization protected against a data breach like this? Learn what coverages you should have in place to protect your organization from a costly data breach experience and about the process of recovery.

How a business can protect itself against cyber crime
Cyber Liability SeminarMRA conference Center in Waukesha, WI.

Wednesday, October 5, 2011
8:00am - 11:30am

Companies receive an average of 4 million attacks against their networks on a daily basis. Sure, companies can employ the best IT talent around, but that’s no guarantee that your network won’t be compromised, or that your data won’t be breached. No system is 100% secure!

Attend our free Cyber Liability Seminar. Learn this and a whole lot more...

Recent news about data breaches and losses sustained due to lack of insurance coverage for cyber crime:

UWM: 75,000 records breached!
Texas Spends $1.8 Million on Data Breach As Lawsuits Loom
WellPoint Fined $100k for Failing to Report Data Breach
Losing the War on IT Security
Sony Laid Off Employees Before Data Breach Lawsuit
RockYou Data Breach Lawsuit Moves Forward
Data breaches may lurk in office copiers and printers
Michael's Department Store Breach 4 Suspects Sought
Average cost of a corporate data breach is $7.2 million
Class slams Michaels for Data Breach

357 People Affected by Data Breach at North Carolina's Wake Forest Baptist
Nurse Accused of Accessing 2,500 Medical Records at Memorial Hospital in Colorado
Walgreens.com site exposed patients’ pharmacy records to other patients?
Hospital employee and three others accused of stealing patients’ identities
An unintended exposure leads to a mea culpa from an online psychiatry journal
Personal Info Stolen From Patients At DeKalb Medical
Drug, paternity test records exposed
Morgan Stanley loses 34k customer records on unencrypted CDs
Groupon loses 300,000 user details
SEGA hacked, records exposed
Eight million health records lost on NHS laptop

R&R Insurance announces the date for the new Cyber Liability seminar, which will cover how a business can protect itself against cyber crime, will be Wednesday, October 5, 2011, 8:00am - 11:30am, held at the MRA conference Center in Waukesha, WI.

Companies receive an average of 4 million attacks against their networks on a daily basis. Sure, companies can employ the best IT talent around, but that’s no guarantee that your network won’t be compromised, or that your data won’t be breached. No system is 100% secure!

How can a business protect itself against a costly data breach or a business-halting compromise to their network?

Attend our free Cyber Liability Seminar. Learn this and a whole lot more...

Recent news about data breaches and losses sustained due to lack of insurance coverage for cyber crime:

UWM: 75,000 records breached!
Texas Spends $1.8 Million on Data Breach As Lawsuits Loom
WellPoint Fined $100k for Failing to Report Data Breach
Losing the War on IT Security
Sony Laid Off Employees Before Data Breach Lawsuit
RockYou Data Breach Lawsuit Moves Forward
Data breaches may lurk in office copiers and printers
Michael's Department Store Breach 4 Suspects Sought
Average cost of a corporate data breach is $7.2 million
Class slams Michaels for Data Breach

357 People Affected by Data Breach at North Carolina's Wake Forest Baptist
Nurse Accused of Accessing 2,500 Medical Records at Memorial Hospital in Colorado
Walgreens.com site exposed patients’ pharmacy records to other patients?
Hospital employee and three others accused of stealing patients’ identities
An unintended exposure leads to a mea culpa from an online psychiatry journal
Personal Info Stolen From Patients At DeKalb Medical
Drug, paternity test records exposed
Morgan Stanley loses 34k customer records on unencrypted CDs
Groupon loses 300,000 user details
SEGA hacked, records exposed
Eight million health records lost on NHS laptop

In preparation for a recent seminar I presented, I came across this great article regarding corporate data breaches and the costly ramifications by Tim Wilson of Dark Reading. Everything's more expensive these days -- and experiencing a major corporate data breach is no exception.

2010 Annual Study: U.S. Cost of a Data Breach reveals that the average organizational cost of a data breach increased to $7.2 million and cost companies an average of $214 per compromised record. The sixth annual Ponemon Cost of a Data Breach report is based on the actual data breach experiences of 51 U.S. companies from 15 different industry sectors.

Interestingly, companies who responded quickly to data breaches ended up paying 54% more per record than companies that moved more slowly, according to the study. 43% of companies notified victims within one month of discovering the breach, up seven points from 2009. In 2010, these quick responders had a per-record cost of $268, up 22% from 2009; companies that took longer paid $174 per record, down 11%.

Malicious or criminal attacks are the most expensive breaches, the study says, and are on the rise. In this year’s study, 31% of all cases involved a malicious or criminal act -- up seven points from 2009 --and the cost of these compromises averaged $318 per record, up 43% from 2009.

While external breaches are on the increase, negligence remains the most common threat, Ponemon says. The number of breaches caused by negligence edged up one point to 41% and averaged $196 per record, up 27% from 2009.

System failure dropped nine points to 27% in 2010. "This trend indicates organizations may be more conscientious in ensuring their systems can prevent and mitigate breaches through new security technologies and compliance with security policies and regulations," Ponemon says.

Encryption and other technologies are gaining ground as post-breach remedies, but training and awareness programs remain the most popular, the study says. 63% of respondents use training and awareness programs after data breaches, down four points from 2009. Encryption is the second-most implemented preventive measure as a result of a data breach, with 61%. Both encryption and data loss prevention (DLP) solutions have increased 17% since 2008.

The study takes into account a wide range of business costs, including expense outlays for detection, escalation, notification, and after-the-fact (ex-post) response. The study also analyzes the economic impact of lost or diminished customer trust and confidence as measured by customer churn or turnover rates.

"Churn is still the highest cost that we see," Ponemon said. "There's an attitude out there that users no longer care about their privacy as much, but our data shows that they really do."

The U.S. Cost of a Data Breach Study was derived from a detailed analysis of 51 data breach cases with a range of nearly 4,200 to 105,000 affected records. The study found there is a positive correlation between the number of records lost and the cost of an incident. Companies analyzed were from 15 different industries.

For more information on how to protect your company against the cost of a data breach or anything regarding cyber liability, contact a knowledgebroker.