Banks have a big responsibility to their customers. They possess sensitive customer information that needs to be protected. Both federal and state regulators are scrutinizing financial institutions on an increasing basis. They look at a banks’ internal data protection protocol and cyber liability insurance.
Necessity of Cyber Insurance
The cyber insurance financial institutions need is available and has become a necessity. It is becoming a regulatory requirement for many banks. Insurance is a great risk management tool beyond regulatory compliance. A financial institution’s cyber insurance coverage should be commensurate with the level of risk involved with operations and types of activities.
Scope of Coverage
It is important that banks get the coverage they need. Not all cyber insurance products are the same. Financial institutions should understand the benefits and limitations of different policies. The cost of a data breach can be astronomical. What is typically overlooked is the cost of reputation loss. Many new cyber insurance financial institutions policies include a brand or reputation damage coverage. Make sure your scope of coverage meets the needs of your institution.
Banks are especially vulnerable to cyberattacks because of the sensitive personal information they possess. Increasing cyber security is important but cyber insurance is imperative. If a breach occurs, you and your customers will need financial assistance to save reputations and recover identities.