“Breaking Bad” in Cyberspace: a Challenge for the Insurance Industry by Carrie E. Cope and Ian Reynolds of Schuyler, Roche & Crisham, PC points out that anyone who may have thought that potential risks from communications, and other activities, in cyber space have been exaggerated, or are too remote to raise significant concerns for their business or clients, should have certainly received a strident wakeup call in light of the recent data breach at Sony. Given the high tech nature of the movie industry, Sony’s size and resources, Sony presumably has very sophisticated network security in place. While that may be the case, who would have expected that a foreign government would use cyber warriors to attack Sony’s information systems and expose internal communications as part of an effort to stop the release of a movie? In fact, had that plot been the subject of a movie, it may have been criticized as being too improbable—yet it happened. We now live in a world where it appears that no one is safe in cyber space.
This commentary discusses issues of paramount importance to business owners, management and the attorneys who will be advising them on risk management issues today and in the coming years, including:
• Trends in technological advances and social engineering that impact cyber risks, ie. the use by employees at work of their personal mobile devices such as cell phones and tablets;
• Recent payouts made by insurers for data breach claims;
• Other factors impacting cyber risk assessment, including safeguards businesses are using for cyber risk management;
• Guidelines issued by federal and state regulators to combat cyber-attacks;
• Laws and regulations drafted to ensure businesses and other organizations appropriately protect themselves and their data;
• Steps being taken by regulators to assist in the assessment of cyber risks;
• Key issues for insurance producers doing business in the cyber insurance realm;
• Insurance products offered by insurers to address cyber risks; and
• An update on court decisions addressing insurance coverage disputes involving data breaches and other cyber-related risks.
Carrie E. Cope is a shareholder at Schuyler, Roche & Crisham, PC. She manages the firm's specialty lines' insurance claims and coverage consulting practice as well as the firm's regulatory practice. Carrie focuses on the following insurance lines: directors and officers liability (for-profit and not-for-profit), cyber liability, social media liability, employment practices liability, fiduciary liability, professional liability, errors and omissions, trade credit and glass insurance. She is the co-author of Social Media and Insurance: The Insider's Guide to Successful Risk Assessment and Management (LexisNexis May 2014), as well as the author of numerous book chapters, articles and blogs written on a variety of insurance topics.
Ian Reynolds is an associate in the insurance claims and regulatory practices at Schuyler, Roche & Crisham, P.C., focusing on claims involving cyber liability and management liability, including D&O liability, employment practices liability and fiduciary liability. He also provides general litigation assistance to a variety of other practices within the firm.
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