With increased cybersecurity awareness and preventative technology by small to Fortune 500 companies, criminals are still finding it fairly easy to identify and attack cyber weaknesses. Possessing risk-management technology is essential for the mortgage industry due to the sensitive personal and financial information they possess and are privy to. In general, risk-enhanced platforms are designed to proactively identify cybersecurity gaps and safeguard against potential financial and reputation losses, as well as regulatory scrutiny to the business’ infrastructure resulting from data security breaches. However, no cybersecurity best practices are completely invulnerable when considering the potential opportunities for error in processes, equipment, human interaction, and third-party vendor information exchanges.
What happens if there is a security incident or a data security breach such as lost paperwork, a system glitch/virus, or criminal access to your computer platform, all of which could disrupt or paralyze business as usual? With the recent transition from manual to automated mortgage technology, it is crucial that all mortgage businesses have a risk management strategy that entails cyber risk prevention and a recovery plan which includes cyber risk insurance.
Commercial liability and property insurance are standard with any legitimate business; however, these are very unlikely to provide coverage or protection in the event of a cyber incident where losses are incurred. Cyber risk insurance coverage varies based on the insurer and their ability to customize the coverage to meet the specific needs of your business. Generally, cyber risk insurance is designed to keep a business financially afloat during the recovery stages of a security breach. Some examples of the unbudgeted recovery expenses could be investigative or restorative services, equipment replacement or lingering effects of regulatory defense, and costly litigation, depending on the specific ramifications of the breach. With the benefits of cyber risk insurance, it is more likely that a business can recover from a cyber incident efficiently and expeditiously with minimal outlying impact, and hopefully, the business’ reputation will be spared and customer/vendor/stakeholder relationships will be salvaged.
Many companies are deterred by the seemingly excessive cost of cyber insurance, possibly justifying this decision that they have a solid risk prevention plan in place or the false notion that they are an unattractive target for risk. But with the recent end-to-end automation migration in the mortgage process from financial document uploads to e-notary to e-underwriting and closings, the emerging cyber risk threat is relevant to the mortgage industry enough to seriously consider adding cyber insurance to the risk management plan.
Written by Kourtney Manley, Business Analyst at OnlineApplication