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Costs of cyberattacks grew 26 percent in 2013

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In managing the personal and financial data of customers, firms handle large amounts of sensitive information. However, this information can be vulnerable to cyberattacks, which can result in huge losses as the costs of cyber-related incidents grow, especially if companies do not protect themselves with business insurance. Insurance policies that specifically cover data, such as professional liability insurance that covers cyber-related risks, are able to help pay for expenses that may result in the event of malicious cyberactivity. 

The cost of cyberattacks rose for a fourth straight year, surging 26 percent in 2013 compared to last year, Infosecurity Magazine reported. In the 2013 Cost of Cyber Crime Study conducted by the Ponemon Institute and HP Enterprise Security Products, the annualized average cost of cybercrime for U.S. businesses was $11.56 million.

One of the factors in the rise of cyberattack costs is the amount of time it takes to resolve an attack, which increased 130 percent to 32 days in 2013 with the average cost of $32,469 per day. Data breaches were associated with the highest external costs and business disruption was second. The survey showed a growing trend of malicious cyberactivity, making these risks more likely to interrupt business operations than result in confidential data loss.

While information loss declined 2 percent to make up 43 percent of annual external costs in 2013, business disruption increased 18 percent to 36 percent of external costs this year. As businesses try to pick up where they left off, they usually undergo remediation in order to safeguard their systems from more cyberattacks and investigate the cause of data breaches. In the survey, recovery from and detection of cyber?threats represented 49 percent of the total internal activity cost for organizations.

The Ponemon Institute study indicated security intelligence technologies were able to detect and manage cyberattacks, saving organizations money. Other enterprise security practices, such as hiring an executive security leader and expert cybersecurity staff can reduce costs by an average of $1.5 million per year.

Follow the 3-2-1 Rule for backing up data
Another way to protect valuable information is backing up multiple versions of documents, according to CPA Practice Advisor. It is best practice for accountants and tax professionals to follow the 3-2-1 Rule, which dictates firms keep three copies of important information. CPA Practice Advisor cautions accounting firms to practice the 3-2-1 rule, but it also applies to businesses in all industries. Firms should hold a copy in an off-site location to make it easy to retrieve data if disaster happens. They should also get in the habit of storing information using two types of media, such as a thumb drive plus cloud storage.

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