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Reduce reputational damage with cyber incident response planning – CoverLink Insurance



In recent years, cyber incidents and reputational damage have increased in both cost and frequency. This is why it is important for companies of all sizes and sectors to understand their digital exposures and take steps to minimize the damage that can occur from cyber incidents. In particular, companies should consider their reputational risks.

After all, how a company responds to a cyber incident can make or break its reputation. In the event of a poor response, a company may encounter various consequences – including dissatisfied stakeholders, lost customers and reduced market value. Fortunately, companies can mitigate these reputational damages through effective cyber incident response planning.

The company̵

7;s brand, or reputation, refers to how a company is seen in the eyes of others. A company’s reputation is one of its most valuable assets. Companies with a good reputation are generally perceived to provide greater value than their competitors. As a result, companies with a respected reputation can benefit from more loyal customers who buy a wide range of products and services (sometimes even at increased prices), which increases profits, promotes growth and promotes operational success. In short, a company’s reputation is crucial to its performance.

In today’s society, a company’s brand or reputation can be affected in several ways. While a business can strengthen its reputation through marketing and advertising, consumers have become increasingly interested in the personal experiences of others. Consumers are thus more likely to use social media and online reviews when deciding which companies they trust, respect and want to give their money to. As such, it is crucial for companies to maintain positive customer interactions and ensure that their brands are adequately represented online to build a good reputation.

In any case, building a respected brand or reputation is an ongoing effort that requires continued commitment. And while a company’s reputation can take a lot of time and commitment to create, it can easily be damaged by an individual event – such as a cyber incident.

Cyber ​​incidents have become a growing threat, with the majority (98%) of business leaders confirming that their companies have suffered at least one incident in the past year, according to recent research from Deloitte.

Such incidents often have different financial consequences. In fact, the latest data breach report from IBM and the Ponemon Institute found that the average cost of a cyber incident is currently more than $ 4 million. These expenses usually include notifying interested parties, investigating the incident, mitigating damage and adopting cyber security initiatives to prevent future incidents.

In addition to such expenses, cyber incidents can also lead to persistent reputation problems, which exacerbates costs. According to a Forbes Insight report, almost half (46%) of companies have suffered reputational damage due to cyber incidents. After a company has experienced a cyber incident, its stakeholders may question its digital hygiene and data protection practices. In addition, these parties may lose confidence in the company’s cyber security measures and privacy capabilities, resulting in lost financing and reduced customer loyalty. These reputation problems can be especially common among companies that face fines or costly lawsuits stemming from how they reacted (or failed to respond) to cyber incidents.

Another result of cyber incidents may be long-term business disruptions and adjustments of higher leadership, which may further fuel stakeholder dissatisfaction and mistrust. Such reputation problems can negatively affect a company’s total value and lead to reduced share prices (if applicable). This concept was proven by Pentland Analytics’ latest report, which showed that corporate market values ​​can fall by as much as 25% in the year following a cyber incident.

Although cyber incidents can lead to significant reputational exposures, there are measures that companies can take to minimize these risks. In the first place, it is crucial for companies to create effective cyber incident response plans. With these plans in place, companies can ensure accurate responses among a range of cyber incidents, minimizing potential losses and maintaining stakeholder trust.

Create a response plan for cyber incidents

Response planning can help companies improve their preparedness for cyber incidents and damage to reputation. In turn, companies’ reputations can be maintained during incidents, which shows their stakeholders that they can successfully navigate difficult circumstances. Effective management planning for cyber incidents requires coordination within a company. Solid response plans should describe:

  • Who is part of the cyber incident response team (eg business leaders, IT specialists, legal experts, media professionals and HR leaders)
  • What roles and responsibilities each member of the response team must maintain during an incident
  • What are the company’s key functions and how this business will continue during an incident
  • How any critical workplace decisions will be made during an incident
  • When and how stakeholders and the public (if necessary) should be informed of an incident
  • What federal, state, and local regulations the company must follow when responding to an incident (e.g., reporting protocols)
  • When and how the company should seek help from additional parties to help recover from an incident (eg law enforcement and insurance staff)
  • How an incident will be investigated and what forensic activities will be used to identify the cause and prevent future incidents

Cybercrime response plans should address a wide range of possible scenarios and be properly communicated to all relevant parties. These plans should also be routinely evaluated to ensure efficiency and identify ongoing security gaps.

In addition to devising effective response plans, companies should ensure adequate cyber insurance. This coverage not only offers protection against financial losses that may result from cyber incidents, but it can also provide access to additional providers and resources (such as legal teams, technical experts, security software, messaging centers, forensic specialists, extortion negotiators and crisis resolution professionals) such as can help companies to effectively respond to such incidents – and thus prevent associated reputation problems.

We can help prevent cyber incidents and reputational damage

As a whole, it is clear that cyber incidents are a serious problem for all companies and threaten both their financial stability and reputation. Nevertheless, companies can, through effective response planning, prepare properly for possible cyber incidents and significantly reduce related precipitation.

If you want additional information and resources, we are here to help you analyze your needs and make the right coverage coverage to protect your business from unnecessary risks. You can download a free copy of our e-book, or if you are ready to make Cyber ​​Liability Insurance part of your insurance portfolio, request a proposal or download our Cyber ​​& Data Breach Insurance Application and we will to work for you.


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