March 13, 2019
Flood insurance, disaster recovery plans, and a litany of other clauses and insurance policies are often used by data centers. However, one type of insurance has been receiving more attention in the past 18 months. Cyber insurance has rapidly become one of the top priorities for many data centers as they seek to increase security, while simultaneously protecting their most valuable assets.
The Key Buzzwords For Data Center Cyber Insurance
Many industry experts are in agreement that cyber insurance should be as high of a priority as fire or flood insurance. The challenge is choosing the right type of policy without creating costly coverage overlaps. With this in mind, there are a few key buzzwords that data center managers should look for when comparing cyber insurance policies. For example, data centers should look for cyber insurance policies that not only cover data loss, but also business interruption and forensic investigations. The latter two entities are arguably two of the biggest risks that data centers face, which is why it is important that the selected policy carefully outlines the anticipated coverage. As a secondary set of buzzwords, data centers can also look for policies that focus on reputation management, extortion, and fraud. However, the aforementioned components are not typically large risk factors for data centers, as such they might be a costly additive that proves unnecessary in the long run.
Speaking of costs, the average data center outage increased approximately $235,000 from 2010 to 2016. This increase, coupled with the approximately $10 Billion IT security market for data centers, is just one of the reasons that cyber insurance is so vital. It might represent a small percentage of the data center industry's total spend, however as the cost of data center downtime continues to increase, as well as the threat of lawsuits and the immediate costs of a data breach are imminent, experts are in agreement that it is well worth the money.
Weighing The Cost Of Cyber Insurance
British Insurance company Aon recently reported that cyber insurance premiums have continued to rise at a rate of 23 percent per year. The firm believes that the total value of cyber insurance premiums will reach $4 Billion by 2021, making it the highest growth rate for any type of insurance. With this in mind, data centers would be wise to expedite their search for the best cyber insurance policies before they become too costly. However, there is a bit of light at the end of the tunnel.
With the introduction of Europe's General Data Protection Regulation there is a chance that insurance companies will lower premiums for the best-prepared data centers. In this vein, data centers would do well to leverage best practice security measures to not only protect their most valuable assets, but also enjoy the benefits of cyber insurance without the cost of high premiums. After all, when the right security practices are implemented and followed, the likelihood that a successful attack can be implemented and completed is greatly reduced. However, that is not to say that data centers should simply focus on security and forget to purchase cyber insurance policies or vice versa. Rather, they should adopt a healthy approach to both of these top priorities.
In the end, it is the right knowledge, preparation, and skills, coupled with the right suite of tools, such as those offered by Raritan, that allows data centers to continue to grow and evolve. Through agility and flexibility, data centers will be able to adapt to changing environments, address the monetary costs and subsequent increasing need for cyber insurance, and meet the evolving needs of the industry head on.
To learn more about how Raritan can help you, visit our website here.