Cyber insurance or cybersecurity insurance is a means that enables organizations to mitigate risks of cybercrimes through transferring the risk to third party to compensate losses. The organization that sustains the cyberattack rely on their cyber insurance to cover monetary losses associated with data breaches. Unfortunately, even though the organization may transfer the financial burden with the insurer, it will still face reputation damages due to the data breach. That means, cyber insurance will not protect organizations from reputational damages that may occur because of the cyberattack.
Due to the increased rate of cyberattacks, organizations nowadays are relying on cybersecurity insurance to minimize risks may arise from applications, devices, infrastructure and networks attacks. Even though cyber insurance will not protect organizations from reputational damages, it will save them from going bankrupt by covering the financial loss of the cyberattack.