While we can have control over our own business’ Cyber Risk Framework, we do not have the same privileges when it comes to oversight of our outsourced service providers. Without the ability to manage risk exposures through internal protocols, our reliance on insurance increases, which is where Contingent Business Interruption (CBI) cover under a Cyber Liability policy can assist. CBI has traditionally been provided in tandem with property insurance, but its uses extend far beyond that to make for a truly robust Cyber Liability policy.
WHAT IS CBI COVER?
Industries that are dependent on outsourced service providers, such as retailers, financial institutions, hospitality, logistics, and IT service providers themselves are more exposed to CBI risksthan others, and therefore must consider the alternative risk transfer strategies available to them.
CBI provides financial assistance when the loss of a primary supplier, partner, or customer causes an interruption to your business. The definition of “loss” will differ between insurers, but typically the loss suffered by a third party must be considered a claimable event under the insured’s policy for it to respond.
CBI COVER UNDER A CYBER POLICY
In today’s globalised world, companies are more reliant than ever on IT services to trade across borders. This move has seen a rise in cyber risks and we are currently witnessing the most threatening environment to date, with a record number of ransomware attacks and increasingly sophisticated malware.
Some Cyber insurance policies will only provide cover for Business Interruption if your business is the target of the cyber-attack. However, if an outsourced service provider is the victim, it can have a considerable impact on your business too. For example, your business may be heavily dependent on a third-party logistics company to supply its stock. If the logistics company suffers a cyber-related business interruption that means it is unable to trade (a Cyber Attack has left its computer systems encrypted and without access to critical data and delivery schedules), then your business will also be negatively impacted. Having CBI cover can help your business maintain adequate cash flow during the resulting reduced trading period.
To find out more about Cyber Liability insurance and the importance of CBI, please feel free to reach out at any time.
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Honan Insurance Group Pty Ltd (Australian Financial Services Licence no. 246749, ABN67 005 372 396) is an insurance broker acting as agent for insureds and intending insureds. Honan is not an insurer. The information on this website has been prepared without taking into account your objectives, financial situation or needs. Any advice provided on this website is general advice only. Before making a decision to purchase an insurance policy, please read the relevant Product Disclosure Statement to make sure the policy is right for you. Insurance cover is subject to policy terms and conditions including policy limits and exclusions.
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