Last Saturday, I had coffee with a friend who had certainly earned her morning pick-me-up. As one of the many thousands of travelers delayed by downed Microsoft machines the day before, she finally reached her destination a full 7 hours after expected. At 2 AM, the airport was still bustling and chaotic. It reminded her of one of those apocalyptic movies where frantic travelers clog up the roadways trying to escape a calamity. While an episode of The Journal podcast places the blame for the outage squarely on CrowdStrike’s shoulders, that doesn’t keep the innocent parties from suffering repercussions. The outage caused major disruptions and billions of dollars lost for airlines, retail companies, healthcare providers, and more.
First Things First: What Happened?
In short: a wake-up call. More specifically, a software bug in CrowdStrike’s system led to a global crash–with the “blue screen of death” appearing on computers and causing disruptions in communication and productivity worldwide. As a leading cybersecurity firm, CrowdStrike’s error highlights the power–and vulnerability– that comes with our dependence on devices. Between glitches like these and the more nefarious threat of cyber-attacks–any business that uses computers is at risk.
This incident has underscored the critical need for robust preventative measures, but let’s assume your digital hygiene is pristine and your cybersecurity practices are top of the line. The next action item is to ensure you’re covered in the event of a breach or a failure. One of the best ways to cover your rear is to have cyber insurance coverage in place.
A Pound of Cure: Benefits of Cyber Insurance Coverage
Like all insurance, you hope your preventative measures work and you never need it, but if you do, cyber insurance coverage can offer more than a pound of cure. It can be a literal business-saver. Incidents like the CrowdStrike fiasco underscore the necessity for businesses to have ironclad cyber insurance coverage to provide a safety net to help organizations recover from cyber incidents more swiftly and effectively.
Benefits of cyber insurance coverage can include some or all of the following:
- Financial Protection
Cyber-attacks and system errors can result in significant financial losses. Cyber insurance provides coverage for costs associated with data breaches, including legal fees, notification expenses, and compensation to affected customers. This financial protection is crucial for businesses to maintain stability and continuity in the face of a cyber incident.
- Business Interruption Coverage
As seen with the Microsoft outage, cyber incidents can cause substantial disruptions to business operations. Cyber insurance typically includes business interruption coverage, compensating for lost income and additional expenses incurred during the downtime. This ensures that businesses can continue to operate and recover without severe financial strain.
- Data Restoration and Recovery
The recovery of lost or compromised data can be a complex and costly process. Cyber insurance often covers the expenses associated with data restoration and recovery, helping businesses to restore their operations more quickly and efficiently. This benefit is especially critical for companies that handle large volumes of sensitive data–such as personally identifiable information (PII).
- Incident Response
Immediate and effective incident response is crucial in mitigating the impact of a cyber incident. Cyber insurance provides access to expert incident response teams that can help contain and resolve the incident quickly. These teams offer specialized knowledge and skills that can be instrumental in minimizing damage.
When Does it Make Sense to Engage a Partner?
For many businesses, it makes sense to engage an Employer of Record to handle the aspects of business associated with increased vulnerabilities–such as payroll. Any worker engaged through PayReel is covered under PayReel’s insurance policies, which includes robust data security (more than an ounce of prevention) and insurance protections (more than a pound of cure). If you think your business would benefit from such robust protections, schedule a free consultation with the pros.
The Bottom Line
The CrowdStrike error and Microsoft outage serve as poignant reminders of the ever-present cyber risks businesses face. These incidents highlight the importance of having preventative measures in place and a plan to mitigate the financial, operational, and reputational consequences of cyber incidents. By investing in comprehensive cyber insurance and/or engaging an EOR that has such cyber insurance in place, businesses can ensure they are prepared to navigate the complexities of the digital landscape and emerge resilient in the face of cyber threats.
Investing in cyber insurance is not just a prudent financial decision; it is a critical component of a robust cybersecurity strategy. As cyber threats continue to evolve, businesses must prioritize their cyber defenses and ensure they have the necessary coverage to safeguard their operations, assets, and reputation.
