If you’ve never thought about buying insurance to protect against losses resulting from phishing, ransomware, unsolicited emails, cookie theft or other hacking tactics in the digital world, you’re not alone.

“Cyber insurance is still one of those things a lot of people don’t understand – or even know exists,” said Scott Kitchen, system administrator for the City of Cody.

Along with city administrator Barry Cook, city attorney Scott Kolpitcke, Kitchen endorsed the Cody City Council’s recent purchase of $1 million in first- and third-party cybersecurity insurance.

He compares cyber coverage to homeowner’s insurance. People lock their doors at night and may even install alarm systems to prevent home break-ins or burglaries. While those actions can help prevent a criminal from entering a home, there’s no guarantee someone won’t still burglarize the home.

“Homeowner’s insurance covers you for financial losses that occur as a result of burglary,” Kitchen says. “Cyber insurance works similarly.”

With the ever-growing dependence on digital information and communications, just about any imaginable or unforeseen type of cyber attack can happen, resulting in a myriad of damages and undesirable consequences.

“When people think of a cyber hack, they typically think of critical, confidential data being stolen – and that certainly does happen,” Kitchen said.

They may not realize a cyber breach can also result in loss of critical data and information.

People have wondered why there’s a need for cyber liability insurance if the city backs up critical data. Kitchen said municipalities and organizations of all sizes typically should, and do, have robust backup and disaster recovery solutions in place.

To prevent exposure to malicious attacks, the City of Cody uses multi-layered security measures, including unified threat management firewalls, intrusion prevention systems, intrusion detection systems, gateway antivirus, client antivirus and full-disk encryption. Yet there is no way to completely ensure a system is impenetrable.

“In today’s landscape of computing, security is almost an illusion,” Kitchen said. “Security is really just a deterrent that is equal to the resources, expertise and time needed to exploit a system. Malicious attacks continue to grow more prevalent and complex, seemingly daily.”

Cybersecurity insurance provides financial protection from possible cyber threats – threats that come in many forms.

“There are endless scenarios, and cyber liability insurance covers a broad spectrum of losses,” Kitchen said.

If a cyber attack were to render the city’s utility billing system data unusable and the city was unable to bill its customers for one month, Kitchen said “a large chunk of operating revenue would be lost.”

Cyber first-party insurance would cover the city’s financial losses. If a customer’s personal information were stolen, cyber liability insurance would cover costs resulting from third-party litigation.

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