Cyber risks and liability

To understand your cyber risk, begin in the cloud

To understand your cyber risk, begin in the cloud

London, 30th January 2015.

You’ve seen the headlines about cyber risk and data breaches so often your eyes are starting to glaze over. At the same time, you know you have to deal with the risk in your Firm, and you have a nagging feeling that ‘IT has it under control’ isn’t quite going to cut it.

As a manager of risk, it can be overwhelming to know where to start. The answer: begin with the same risk management principles that hold for approaching any risk and launch the process by ‘engineering’ the risk. In order to do that, you have to begin with a framework that breaks cyber down into manageable chunks. 

One huge portion of a Firm’s cyber exposure lies outside its own systems. A risk manager can have an immediate impact on the company’s cyber risk by initiating a process to:

  • understand what functions are outsourced and how vendor contracts allocate liability
  • ensuing that all vendors purchase appropriate cyber insurance to further protect your interests. 

Your Firm must understand the Risk

In 2011 Unisys conducted a survey and found that 82%1 of the UK public would stop interacting with a business by closing their account if their data was breached. Cyber infiltration can come from anywhere and isn’t just caused by hacking `professionals`. It can take many forms, from human negligence to disgruntled employees; cyber risk is everywhere and without a good plethora of understanding about Cyber, firms will never know how to neutralise the issue.


How important is your company’s reputation to you?

The amount of personal and confidential data a company stores electronically increases every day. As a result the risks that a Firm’s data could be hacked increases every day and therefore could adversely affect its reputation, bottom line or share price. In order for you to fully appreciate the threat of Cyber infiltration it must be recognised the full scale of what is at stake.

The European Commission are realising that Cyber Risk is a serious threat and are proposing a serious overhaul of the current data protection act. The regulatory landscape is forever changing, The European Union is proposing to introduce the General Data Protection Regulation2 with one single set of rules. If adopted the regulation would impose higher sanctions for those organisations that fail to comply. Alongside this the commission are proposing to set up a directive information security that could have a big impact on organisations such as banks, critical infrastructure and health services.  In conjunction with these potential regulations, firms that fail to comply could suffer a penalty of 2% of their worldwide revenue; the maximum an organisation in the UK can be fined currently is £500,000.3

Sun Tzu, a Chinese General in the 6th century once famously said “… keep your friends close but your enemies closer…” and on a smaller scale this couldn’t be more relatable to Cyber Liability. Never think you are smarter than the hackers, countless companies have fallen ill to the `nonchalant ` attitude towards their cyber protection. As a result numerous medical, financial and confidential business records have been accessed by an alien party and exposed to the world. These incidents affect millions of customers and as result will leave your company open to civil liability, litigation and liquidation.

Insurance cover for your companies Cyber Liability must be a top concern, the ramifications for any sort of breach can be massively costly both fiscally and for reputation. Conventional insurance would not cover the variety of risks possible through Cyber, it is therefore crucial for companies to evaluate existing exposures and consider purchasing a tailor made Cyber security product that protects an organisation thoroughly.

Talk to Aon about cyber risk management before it’s too late. Contact your client manager today.



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cyber liability insurance article

Cyber Liability

To understand your cyber risk, begin in the cloud.

about Cyber Liability
cyber liability insurance article

Cyber Liability

To understand your cyber risk, begin in the cloud.

about Cyber Liability

1 http://www.aon.com/unitedkingdom/business-risks/attachments/cyber/articles/article-managing-cyber-risk_ten-issues-to-consider.pdf

2 The European Commission, Proposal for a Regulation of the European Parliament and of the Council, 25 January 2012

3 ICO - Taking action: data protection and privacy and electronic communications, http://www.ico.org.uk

Whilst care has been taken in the production of this article and the information contained within it has been obtained from sources that Aon UK Limited believes to be reliable, Aon UK Limited does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the article or any part of it and can accept no liability for any loss incurred in any way whatsoever by any person who may rely on it. In any case any recipient shall be entirely responsible for the use to which it puts this article.

This article has been compiled using information available to us up to 30.01.15.