September 1, 2015
Authored by: Jerry Blanchard and David Zetoony
Digging a tunnel for a mile so that El Chapo could slip into the shaft through his shower and disappear from a high security Mexican prison is something you might expect a Hollywood screenwriter to come up with. Is it any more remarkable though than a cyber-criminal reaching all of the way around the world to try and slip into a bank’s or a customer of the bank’s computer system in order to initiate a wire transfer?
We live at a time when individuals and criminal gangs can reach across oceans and national boundaries to try and initiate unauthorized transfers of funds. Bankers understand that this is a hot topic and that the risk of cyber-fraud is what is currently keeping regulators awake at night. While a great deal of attention is now being focused on how to keep cyber criminals out of the bank, recent attacks on various public and private institutions illustrates the complexity of denying malefactors access.
In such an environment, bankers look to various risk management strategies including insurance coverage in the event a breach occurs. The first question many banks raise is about their existing insurance coverage Are we already covered under any of the myriad of existing policies we are required to maintain? For example, what about our general liability coverage? While there may be some exceptions, the typical general liability insurance policy that banks have traditionally purchased oftentimes contains an exclusion for losses incurred by data breaches or intrusions to bank networks. If your existing policy does not currently contain such an exclusion it is highly likely that on your next renewal the exclusion will be included. Thus, it is important for bankers to not only understand what their existing policy does or does not cover but also where industry trends are headed.