Cyber Liability: The Download on Ransomware and Social Engineering

Nearly every organization has an exposure to Cyber Liability. The only differentiating factors are severity and where an organization falls from a risk profile.

Organizations that have a large amount of personal health information, financial information and credit card information can be easily identified as targets for cyber-attacks. These attacks are evident from recent well-documented breaches occurring at Anthem, Home Depot, Citibank, JPMorgan Chase and Yahoo. Organizations that fall outside these areas tend to have a false sense of security and fail to see their own risk, which may be less obvious but no less important than breaches occurring within nationally recognized public corporations.

All organizations have sensitive information in their care, custody and control which may include:

  • Employee information
  • Proprietary information
  • Client data
  • Vendor information

When considering whether to buy Cyber Liability coverage, many companies focus on breach response costs, but overlook the less obvious risks, such as ransomware.

According to the Department of Homeland Security, Ransomware is the fastest growing malware and is used as a method to infect users’ systems and extort an organization.

Oftentimes Ransomware is transmitted through e-mail phishing, but it can be transmitted by exploiting security vulnerabilities as well. It works by encrypting the company’s computer system and denying user access. Paying the extortion does not always guarantee the decryption codes will be provided. In fact, it could lead to more extortion attempts. In addition, the effected organization may experience:

  • Corrupted, stolen or damaged files or servers.
  • Loss of Revenue: while the computer system is encrypted, the day-to-day business could be effected. It is important to note that Business Interruption coverage on Property Insurance policies is limited to a physical interruption, so a malware infected system may not be a covered cause of loss since it is a non-physical business interruption.

In addition to breach response costs, Cyber Liability policies will indemnify an organization for their cyber extortion expenses as a result of Ransomware. This can also include:

  • Data restoration expenses to replace, recreate or restore information.
  • Cyber Business interruption expenses as a result of covered interruption.
  • Legal and computer expert expenses.

In addition to Ransomware, there has been a substantial increase in Social Engineering and phishing attacks. In these situations, an outside third party will induce someone at the organization to send sensitive information, transfer money, etc. We will discuss this topic in great length during future blog posts.

Source: Department of Homeland Security, whitepaper “Protecting Your Networks from Ransomware


Lacy Rex
Associate Client Executive | 513.716.6002

Lacy is an Associate Account Executive and member of the Executive Risk Practice at Oswald Companies in Cincinnati. Her focus is on management liability and professional liability lines of coverage. In addition, she serves as Cyber Liability specialist and resource at Oswald Companies. She negotiates policy enhancements across all lines of coverage for Executive Risk including D&O, EPL, Fiduciary Liability, Professional Liability, Crime, and Kidnap & Ransom and Cyber Liability. She works closely with carriers to draft policy enhancements and frequently speaks and blogs about Cyber Liability topics. She earned her Bachelor of Arts degree in History with a minor in Art History from Indiana University.

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information.