In this edition we compare the differences between Commercial Crime and Cyber Liability. We explore the effects these events could have on your business and the trigger points required in the event of a claim.

The implementation of modern technology has changed the way we do business, however this is not without risk.

Today we do not only have to protect our businesses against theft in a physical manner, but also from a digital viewpoint.

COMMERCIAL CRIME

Commercial Crime Insurance covers companies against their financial losses incurred through fraud, theft or dishonesty committed by their employees.

Theft and dishonesty occur in every business, in some manner or form, costing the South African economy in excess of R 950 million per annum. Commercial and white-collar crime is on the increase in South Africa – especially among senior to top management.

If losses are large enough, the company could be liquidated, resulting in the loss of jobs and income.

WHAT ARE THE POLICY TRIGGERS FOR A CLAIM EVENT?

• Fraud, Theft or Dishonesty committed by employees
• Fraudulent transfer instructions
• Third party computer fraud
• Extortion

CYBER LIABILITY

Cyber Crime is defined as any criminal activity involving a computer or network. It is the unauthorized access to, interference with and/or fraud of data.

Data breaches are now a fact of life, and South Africa has not been immune to the risk of Cyber Crime. It is estimated that in 2014, cyber crime cost South African companies in excess of R 6billion.

TYPICAL CYBER RISKS INCLUDE:

• Costs incurred to respond to a data breach
• System unavailability and downtime
• Reputational damage
• Loss of Revenue, Data and/or Competitor Advantage
• Loss of Investor and/or Client Confidence
• Litigation arising from compromised systems or data
• Industry and regulatory fines and penalties

WHAT IS COVERED?

Cyber Insurance provides cover for the following costs associated with responding to a network security or privacy breach.

• Data Recovery and Business Interruption
• Crisis Management and Notification Expenses
• Cyber Liability (e.g. Defence and settlement of third-party claims arising from the compromised data, clients whose IP has been leaked to a competitor and who sue for damages.)

Common causes of incidents include:

• Unauthorized access
  • Hacking and malware
• Accidents and negligence
  • Lost or stolen devices
  • Insecure management and destruction of hardware and physical paper records
  • Social engineering
• Rogue employees
  • Corporate espionage
  • Selling data for financial gain
• Third-party access
  • Compromised in order to gain access to client environments