5 Reasons Why Manufacturing Companies Need Cyber Insurance
In early 2017, an Illinois-based steel manufacturer was the victim of a phishing scam which compromised the W-2’s of their 300 employees. By the time they realized what had happened, numerous employees already had tax returns fraudulently ﬁled in their name.
As you can see, cyber insurance is extremely important in the manufacturing industry. Here are 5 reasons why manufacturing companies need cyber insurance.
An organization’s security is only as strong as the judgment of its employees. All it takes is one employee clicking on what appears to be an innocent link, but is malware, for all the company’s data to be encrypted within seconds. A hacker will then contact the organization asking for a ransom ranging from a few thousand dollars to millions to decrypt the ﬁles. This is the most prevalent attack today as it is used against every industry. The scariest part; certain types of malware are free to download on the Internet by hackers.
2. FORENSIC AND NOTIFICATION COSTS
Should there be a cyber-attack, the Manufacturer will need to engage a forensic investigator ($250-$500/hr) to determine the scope of the attack and if any sensitive data such as employee records or conﬁdential corporate information was breached. If data has been exposed, a law ﬁrm will get involved to notify each individual and regulatory body per the laws of the state.
3. SYSTEM DAMAGE
Manufacturers rely heavily on their computer systems to properly ﬁll orders. Damage to a manufacturer’s computer system could be devastating and lead to defective products or a complete halt in production. The forensic investigator will ﬁgure out what went wrong, but it will take a team to eradicate the malware and repair the system.
4. BUSINESS INTERRUPTION
Furthermore, manufacturers will experience a direct ﬁnancial loss every hour that their systems are down. They will incur unexpected costs such as sourcing products by alternative means and paying staﬀ overtime to meet deadlines. Additionally, manufacturers of non-durable goods could see an exponential loss in proﬁt if their inventory spoils during the system outage.
5. SOCIAL ENGINEERING
Cyber Crime (aka Social Engineering) is one of the most frequent claims in cyber insurance to date. Cybercriminals will trick ﬁnancially responsible employees of the manufacturing organization to send money to a fraudulent bank account. Hackers have become patient and will often sit in the system undetected monitoring and intercepting email activity before executing their scam. Their tactics range from posing as the CEO, a vendor, or client to simply creating fake employee proﬁles in the payroll system to siphon money out.
Contact the Assurance ‘A’ Team to learn more about adding this important coverage to your portfolio.
Evolve MGA – Cyber Insurance Specialists. Hackers Evolve, Your Cyber Policy Should Too.
- Do I Need Cyber Insurance for My Business?
- Two Minute Tuesday: Cyber Video
- Cyber E-Book
- Top 5 Cybersecurity Risks Every Business Leader Needs to Know Webinar Replay
ABOUT THE AUTHOR