Impact of cyber crime set to rise

Insurers and underwriters are predicting a rise in white collar extortion as the recession continues to bite and unemployment figures increase, but worryingly many businesses do not have insurance cover for data or business loss, according to insurance and financial advisers, The Wilson Organisation.

"According to a DTI Information Security Breaches Survey, a third of UK businesses think general business insurance provides full cover for damage to the business arising from data loss," comments Wilsons' Simon Hoare, "but the reality is quite different, with very few businesses likely to be insured against the result of cyber attacks on its most crucial management and business tool - corporate and customer information, most of which is today held on corporate IT systems.

"For public company directors, this is in fact in breach of their duties under the Turnbull Report, which requires them to identify, manage and take an informed opinion on the transfer of risks for the business."

Protecting an IT system does not mean simply installing the latest virus and firewall protection from determined and dedicated hackers, as Simon explains: "Cyber attacks are believed to be carried out by ‘hackers', who enjoy the intellectual challenge and game of hacking itself, more than the results of the associated extortion," says Simon. "The economic downturn has resulted in people of all levels and responsibilities losing their jobs, and those with a detailed knowledge of their former employers' IT and operating systems may well present a real potential threat, and turn to extortion as a way of taking revenge on their former employer, and of making some money at the same time.

"Malicious erasure of data from client files or tampering of individual internet websites is a real risk and will cost a business dear in both clerical and management time, as well as through lost revenue and reputation."

Businesses are advised to thoroughly review risk management procedures and insurance programmes to ensure they have adequate and relevant cover in place: "The responsibility to get the house in order should lie with an organisation's Managing Director or Finance Director, and not the IT department alone," says Simon. "IT defences whilst vital only react to known problems and are not guaranteed to be 100 percent secure. Protection for the whole business and its sustainability is without doubt the safest option."

The Wilson Organisation provides professional independent insurance, financial, risk management and corporate finance solutions to businesses and individuals both regionally and nationally. For more information, visit: http://www.wilorg.com/, or Tel: 0115 942 0111.