Six reasons the food and beverage industry needs cyber insurance
With the increasing integration of technology into business practices, we explore why and how should companies protect themselves from cyber-threats.
As a C-level professional, risk manager or general counsel of a food and beverage company, you may know that cyber-risk is a threat. What you may not know is that the food and beverage industry has become a real target.
Today, cyber-exposure has evolved from data breaches to attacks that are even more crippling, including business interruption, cyber-extortion and more.
The integration of technology into manufacturing processes, sales and distribution has created a new and significant risk for food and beverage companies. In some cases, hacks can render systems unable to communicate and halt operations altogether.
Take, for example, the 2017 malware attack dubbed NotPetya that impacted many large and well-known companies, one of them being Mondelēz International Inc, the American multinational confectionery, food and beverage company.
After the attack damaged its computer systems, operations were impacted, including production at a Cadbury chocolate factory. The company also reported a 5 percent drop in quarterly sales due to shipping and invoicing delays, according reports.
As a result of the damage caused both to its hardware and operational software systems, MDLZ incurred property damage, commercial supply and distribution disruptions, unfulfilled customer orders, reduced margins, and other covered losses aggregating well in excess of $100,000,000.”
This is here in an article by Dan Burke at , a Northern California Insurance Broker).that Mondelez forged against its insurance company for not paying out under its property policy after the attack (more on why this exposure could have been covered if a cyber-policy was in place can be found
We’re also seeing awhere bad actors use phishing emails to capture an employee’s credentials. The hackers then change bank information to reroute payroll deposits. And of course, there is the traditional type of exposure in cyber-attacks, which is the threat of financial data loss related to customer credit cards and/or loss of personally identifiable or health-related information.
The answer lies in cyber-risk management, which includes a properly developed insurance program. This would include a specialised insurance product that specifically covers the exposures arising from our technology-driven world.
This type of insurance product is referred to as many things: cyber-liability, privacy, network security, data breach coverage and more – but let’s stick with the more general ‘cyber insurance’ for the purposes of this article.
Surprisingly, even with tech attacks on the rise, 68 percent of US businesses have not yet purchased any form of cyber insurance. Maybe it’s because it can be confusing to understand where one insurance coverage picks up where the other leaves off.For example, property insurance underwriters that typically provide coverage for business interruption are no longer wanting to take on the cyber-risk within a property policy.
There may be other policies that a business has in place that offers limited coverage for a cyber-event. However, the majority of underwriters are now looking to exclude specific cyber-risks within other lines of insurance, as they were not originally intending to cover them.
Being that cyber insurance is an important way to transfer the risk exposure that food and beverage companies face today, let’s look at six reasons why you may want to invest.
Investing in cyber-coverage as a part of your risk management process is key.
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